Growth in non-food credit slipped to 5.15% year-on-year (y-o-y) during the fortnight ended October 23 from 5.68% in the previous fortnight. The shrinkage in credit growth came even as banks continued to raise their forecasts for credit growth in the second half of FY21.
In a year-to-date basis, outstanding non-food credit fell 0.46% to Rs 102.72 lakh crore, showed data released by the Reserve Bank of India (RBI). Deposits with banks stood at Rs 142.93 lakh crore as on October 23, up 10.13% y-o-y.
The slowing trend in loan growth is despite banks sounding a more cheery note. Most large banks say that they are seeing a pick-up in economic activity and expect that to translate into higher loan growth. State Bank of India (SBI) chairman Dinesh Kumar Khara said last week that the bank is expecting an 8-9% credit growth in FY21 because economic activity has gathered pace.
“We have already seen the growth as far as our book is concerned. We have seen growth of about 6% till September 30. Hopefully, with the unlocking happening, we should be in a position to reach better than 8%.”
Khara added that in the retail book, SBI is seeing a good amount of traction in home loans. Home-loan sanctions were up about 29% y-o-y in the September quarter and disbursements rose by 12%. Auto loans grew 29% y-o-y in terms of sanctions and 27% in terms of disbursements. In personal loan sanctions, there was a growth of 55% during the September quarter and sanctions rose 61% for SBI.
For both public-sector banks (PSBs) and private banks, much of the fresh lending in the last few quarters has been in the government segment as also in gold loans. The emergency credit line guarantee scheme (ECLGS) has also helped step up loan sanctions to small enterprises.
Bank of India (BoI) chief executive AK Das guided for at least a 7% y-o-y growth in credit. “Mostly, it will be driven by the RAM (retail, agri and MSME) segments and government-backed accounts because there is not much corporate credit demand as of now. It is still an evolving situation and we will see in another one or two months down the line, if there is demand,” Das said.
Most private banks have refrained from sharing any guidance on credit growth for the current year.
Source: Thanks https://www.financialexpress.com/economy/non-food-credit-growth-slips-to-5-15-during-fortnight-ended-october-23/2124798/