The credit expansion will move to normal level in next financial year (2021-22), tracking recovery in economy for better growth, according to State Bank of India chairman Dinesh Khara.
"The economy is expected to be on normal course in early next financial year. The credit cycle may take little longer to become normal," he said while addressing annual general meeting of the Bengal Chamber of Commerce and Industry (BCCI).
The retail credit growth is back to pre-Covid level. The credit usage by corporates is dependent on demand on ground and capacity utilization, which stands at 69 per cent now.
SBI, country’s largest lender, clocked 6.02 per cent (year-on-year basis) growth in credit to Rs 23,83,624 crore in September 2020, mainly driven by Retail (Personal) Advances (14.55% YoY), Agri Advances (4.19% YoY).
The credit growth in India has been subdued and also hit by economic downturn due to Covid-919 pandemic. Commercial banks in India have reported a 5.1 per cent growth in credit in 12 months till October 23, 2020, down from 8.9 per cent in previous 12-month period, according to RBI data.
Reserve Bank of India (RBI) in latest monetary policy (October 2020) said the recovery in the rural economy is expected to strengthen further. The turnaround in urban demand is likely to be lagged in view of social distancing norms and the elevated number of COVID-19 infections.
The real Gross Domestic Product (GDP) is expected move into positive territory in the fourth quarter (0.5 per cent) of fourth quarter of Fy21 from contraction in the three quarters. The real GDP growth for Q1Fy22 is placed at 20.6 per cent, RBI said.