Non-food loan growth pace decelerates to 7.3% in February 2020 from 13.2%

Bankers said the tepid credit off-take was reflection of elongated economic slowdown and demand

The pace of non-food credit dispensed by Indian banks decelerated to 7.3 per cent in February, from 13.2 per cent in the year-ago period.
 

The slump in credit was evident across industry, agriculture, and the services sector. However, the retail loans segment was an exception, with slight acceleration to 17 per cent in February 2020 as against 16.7 per cent in February last year, according to RBI data.
 

Bankers said the tepid credit off-take was a reflection of the prolonged economic slowdown. The lockdown has led to severe disruption, adversely impacting loan demand further, in March 2020. Normally, growth in the last month of the financial year gains traction as businesses and corporates increase use of credit limits before closing books.
 

Credit growth to industry decelerated to 0.7 per cent in February 2020, from 5.6 per cent in February 2019. Within industry, credit growth to ‘beverage & tobacco’ accelerated.
 

Credit to industry segments such as ‘mining & quarrying’, ‘food processing’, ‘chemical & chemical products’, ‘textiles’, ‘basic metal & metal products’, engineering’, and ‘leather & leather products’ contracted in February 2020.
 

Credit growth to the services sector — which is manpower intensive — decelerated sharply to 6.9 per cent in February 2020, from 23.7 per cent in February 2019, the RBI said. The pace of loans given to non-banking financial companies dipped to 22.5 per cent from 47.5 per cent.
 

Banks pointed out that a slowdown in credit to NBFCs should not be construed as reduced support to the liquidity-challenged sector. In fact, banks are extending a helping hand by purchasing loan portfolios — especially retail and SMEs — from finance companies, to manage tough days.
 

Meanwhile, credit growth to agriculture and allied activities decelerated to 5.8 per cent from 7.5 per cent.