Banks' YoY credit growth at 6.7 per cent remains subdued in June

Mumbai: Indian banks’ year-on-year non-food credit growth remained subdued at 6.7% in June against a growth of 11.1% in the same period last year, as pandemic-induced origination challenges and risk averseness slowed down lenders’ new exposures to both businesses and individuals.

The gross outstanding bank credit in June 2020 was at Rs.91.36 lakh crore against Rs.85.47 lakh crore in June 2019, the latest Reserve Bank of India data on sectoral credit showed.

“On a year-on-year (y-o-y) basis, non-food bank credit growth at 6.7 per cent in June 2020 was nearly the same as in May 2020 but lower than the growth of 11.1 per cent in June 2019,” the central bank said on Friday.

Loans to industries grew by 2.2% YoY while retail loans saw a growth of 10.5% YoY against a growth of 6.4% and 16.6% last year respectively, the data showed.

The month of June saw the Indian economy gradually reopen from a nationwide lockdown imposed by the government to arrest the spread of the coronavirus.

The slowdown in disbursement of new credit in this period has been attributed by bankers to challenges in conducting origination activities, lack of clarity in moratorium extension and risk averseness amid tell-tale signs of stress across sectors.

While outstanding loans to micro and small businesses shrunk by 3.7% YoY in June, the loans to medium sized businesses saw a contraction of 9% in this period, the data showed.

Meanwhile, in retail loan portfolios housing, vehicle and unsecured personal loans showed encouraging signs of growth at 12.5%, 7.1% and 12.1% respectively. However, outstanding credit card loans slowed down to 2.8% in June against 27.5% last year, the data showed.

See also  New drug RLF-100 shows dramatic recovery in COVID-19 patients suffering respiratory failure

“Within this sector, vehicle loans registered an accelerated growth in June 2020 vis-à-vis their level in the previous month as well as the corresponding month of the previous year,” the central bank said. “Housing loans have also continued to perform well.”

Loans to services such as transport, trade, NBFCs and real estate grew at 10.7% in June 2020 against 13% in June 2019 which the central bank said was “robust, albeit decelerated.”

“Within this sector, credit to commercial real estate and computer software has bucked the downtrend, registering accelerated growth vis-à-vis the corresponding month of the previous year. Credit to NBFCs has also continued to grow at a healthy pace,” RBI said.



Please enter your comment!
Please enter your name here