Credit supply to commercial sector slows to multi-year low of 8.1%: Sidbi

Amid a slowdown in economic activity, state-owned Sidbi on Thursday said credit supply growth to the commercial sector has slowed to a multi-year low of 8.1 per cent for the 12 months ended September 2019.

The data, put together in association with credit information company TransUnion Cibil, comes at a time when economic growth is estimated to slow to a decadal low of 5 per cent for 2019-20 and overall credit growth has slipped to 7.1 per cent for 2019.

The total outstanding credit of the commercial sector was Rs 65 lakh crore in the year ended September 2019, up 8.1 per cent, a multi-year low growth, as against 16.2 per cent in the year to December 2018, the quarterly report said.

"The industry-level credit exposure trends are driven by either growth or slowdown in fresh loan disbursals, changes in utilisation levels of existing limits or changes in the percentage of exits of existing limits," Cibil Managing Director and Chief Executive Officer Satish Pillai said.

As the growth in the denominator goes down, there has been an improvement in the asset quality with the gross non-performing assets (GNPA) ratio for the commercial segment improving to 16.8 per cent in the year ended September 2019 as against 17 per cent a year ago, the report said.

It also added that the trend of an increase in share for the private banks continued at the expense of the capital-starved state-run lenders.

The share of private banks in the overall commercial credit stands at 38.9 per cent, up from 36.3 per cent in the year-ago period, while the same for state-owned lenders has come down to 48.2 per cent from 51.2 per cent, it said.

Surprisingly, the troubled non-bank lending segment seems to be holding or even growing on to its shared which stood at 12.8 per cent as against 12.5 per cent in the year-ago period, the report said.

From an asset quality perspective, the medium sized businesses are the most problematic for the system with state-run lenders posting a GNPA of 29.3 per cent, NBFCs 8.1 per cent and the leaner private sector banks 6.1 per cent.

The report said lending to micro, small and medium enterprises has increased for smaller borrowing size and lower duration borrowers, it said.