Bank credit offtake shows stickiness, rises 7% in November: RBI data

Rating agency CARE in a statement said the credit growth is expected to be in the range of 7.5% to 8.0% for FY22.

Reflecting the steady pace of business, bank credit rose by 6.97 per cent in 12 months ended November 19, 2021, according to Reserve Bank of India data.

The outstanding credit of commercial banks stood at Rs 111.62 trillion, up from Rs 104.34 trillion a year ago. The growth in advances was 5.8 per cent Year-on-Year (Y-o-Y) basis as of November 20, 2020.

Sequentially, loan growth was 7.1 per cent Y-o-Y in the previous fortnight (November 15, 2021). The credit expansion was flat in the reporting fortnight (with an addition of just Rs 1,157 crore).

Bankers said this was the first fortnight after the peak of festival season (Dussehra and Diwali). Yet, the credit off-take has shown stickiness. Besides, the credit outreach across branch network by public sector banks over last months has helped to maintain the momentum.

Meanwhile, rating agency CARE in a statement said the credit growth is expected to be in the range of 7.5 per cent to 8.0 per cent for FY22. The economic expansion, government guaranteed emergency credit assistance (extended till March 31, 2022), low interest rates, festive season, and a low base effect are supporting the uptick in loan growth.

The sector’s medium-term prospects, however, look promising with diminished corporate stress and increased provisioning levels across banks.  

Bank credit growth improved to 6.8 per cent y-o-y in October 2021 from 5.1 per cent a year ago, while it stood at 6.7 per cent for September 2021 as well as August 2021.

The retail loan segment is expected to do well as compared with industry and service segments. However, a new coronavirus (Covid-19) variant has emerged as the top threat to global recovery and pandemic-led credit losses could increase if localised lockdown measures persist and changed consumption patterns could negatively affect certain sectors, CARE said.

The deposits rose by 9.8 per cent in 12 months to Rs 157.79 trillion. The pace has moderated from 10.9 per cent growth clocked a year ago (November 20, 2020).

Sequentially, deposits fell sharply by 1.66 per cent (Rs 2.67 trillion) in a fortnight from Rs 160.46 trillion as on November 05, 2021.