Infra demand led bank credit growth in 2009-10

Loans to infrastructure segments like power, telecom, roads and ports led the growth in bank credit in 2009-10, when the Indian economy was emerging from shadows of the global financial crisis. Credit to these four sectors rose in the range of 23 to 66 per cent in 2009-10.

Credit to the infrastructure sector helped lift growth of bank loans by 21 per cent in the year ended March 31. If lending by banks is any indicator, the Indian economy is on the required path that will help it raise its gross domestic product growth to more than 8.5 per cent. Roads and ports got the biggest chunk of bank loans in the year ended March 2010, according to an analysis of data from the balance sheets of banks. Advances for roads and ports grew almost 37 per cent to Rs 2,56,498 crore from Rs 1,87,868 crore a year earlier.

The biggest rise came from the power sector, with outstanding loans of Rs 1,66,369.16 crore at the end of March, compared with Rs 1,05,022.49 crore a year ago. Demand came from projects for additional power generation, as well as the addition of private sector transmission to the national grid.

Funding to the telecom sector, new cellular phone operators as well as existing players, rose by 23 per cent to Rs 66,802.7 crore from Rs 54,296.7 crore in 2008-09, according to the annual report for the year ended March. The growth in loans for telecom infrastructure is expected to continue on account of the decline in rates and increased focus on rural markets. Further, the proposed allotment of additional spectrum is expected to result in significant investments for roll out of services.

Among other sectors, credit increased by 21 per cent to auto ancillaries, steel, metal products, cement, paper, sugar, media, airlines and hotels.