A first in many years, FY17 credit growth to lag GDP growth

Historically, overall credit has grown at 1.6 times GDP growth

Pressures such as a virtual freeze on corporate capital expenditure, slowing retail loan growth, particularly because of demonetisation, and banks’ inability to lend because of their burgeoning bad loans have led to a continuous weakening of overall credit aka non-food credit offtake in recent months. This metric has come down from 9.1 per cent growth in the quarter ended March 2016 to four per cent in the December quarter. It fell further to 3.5 per cent in January. In this backdrop, most experts believe credit growth could lag gross domestic product (GDP) growth in FY17 after growing at