Retail, agri loans grow in June as states begin to ease Covid-19 curbs

Credit in retail and farming gathered pace on a year-on-year (YoY) basis in June 2021, reflecting a rise in economic activity as states begin to ease curbs gradually.
 
However, credit growth of industry and services sector decelerated in the reporting month (June 2021), according to Reserve Bank of India data.
 
Loans to agriculture and allied activities showed an accelerated growth of 11.4 per cent in June 2021 as compared to 2.4 per cent in June 2020. Loan growth reflects better harvest in the Rabi season and prospects of a good monsoon for the third year in a row, said senior public sector bank executives.
 
Retail loans, covering housing and vehicles, among others, registered an accelerated growth of 11.9 per cent in June 2021 compared to 10.4 per cent a year ago. This is primarily due to accelerated growth in vehicle and gold loans.

Retail bank credit will see an uptick from the second quarter, riding on gradual easing of lockdown and increase in economic activity in the country. However, the pace will still remain below the growth rates seen in the pre-pandemic period. Also, the emergence of the third wave remains a big risk that may dampen activity, bankers said.
 
Acco­rding to RBI data in the pre-pandemic phase of 2019-20, YoY growth in retail credit was 16.6 per cent in June 2019.
 
In the industry segment, overall credit growth shrunk by 0.3 per cent in June 2021 from growth of 2.2 per cent a year ago.
 
Size-wise, credit to large industries shrunk by 3.4 per cent in May 2021 as compared to a growth of 3.6 per cent a year ago.
 
Credit to medium industries rose by 54.6 per cent in June 2021 compared to a contraction of nine per cent a year ago.
 
Credit growth to micro and small units accelerated to 6.4 per cent in June 2021 compared to a contraction of 2.9 per cent in June 2020.
 
Credit demand by micro, small and medium enterprises (MSMEs) increased to near pre-pandemic levels in June 2021, recovering after a drop in loan enquiries in April and May due to the second wave, revealed the SIDBI-TransUnion CIBIL report.
 
The reading on the index of credit enquiries fell from 139 in March to 67 in April before inching up to 75 in May. It moved up to 95 in June, said CIBIL.