Psu Banks & #39; Non-Food Credit Offtake Slumps

Non-food credit offtake of public sector banks has declined by Rs 1,224 crore owing to a sharp decrease in loans extended by State Bank of India (SBI).

According to bank chiefs who attended the review meeting convened by finance minister Yashwant Sinha on Friday, non-food credit extended by 30 banks, excluding the SBI, jumped by Rs 2,410 crore between March 23 and June 1.

A dozen banks have shown an increase in non-food credit during the period, sources said. During the corresponding period last year, non-food credit from public sector banks had jumped by Rs 4,574 crore over the previous year.

"Though there was a 3.3 per cent increase in non-food credit during the period last year, non-food credit has traditionally decreased in this period," said a bank chief.

In eight of the last 10 years, non-food credit has shown a decrease between the last week of March and June.

During the period this year, bank credit jumped by 1.5 per cent or Rs 7,583 crore mainly on account of a 22 per cent or Rs 8,807 crore rise in food credit compared with a Rs 10,964 crore rise in the corresponding period last year.

Between March 30 and June 15, however, non-food credit rose by Rs 524 crore. At the finance minister's meeting, bankers said that there is insufficient demand for credit in the traditional sectors such as steel, textiles, engineering and auto ancillaries, while there is demand from sectors such as financial services, branded consumer goods, pharmaceuticals and light manufacturing.