Credit Flow To Industry Up 195% In 2003

RBI ANNUAL REPORT FOR 2002-03

The flow of bank credit to medium and large scale industries went up by 195 per cent in 2003.

In absolute terms, it went up from Rs 9,487 crore in 2002 to Rs 28,001 crore in 2003. Of the total bank credit, industrial credit accounted for 16.3 per cent in 2003. This was in contrast to 5.8 per cent in 2002.

Bank credit to housing and priority sector have also shown a sharp rise while that to the wholesale trade sector and other sector have shown a fall.

Banks investments in shares issued by the private corporate sector has risen 75 per cent to Rs 7,586 crore as on March 2003 as against Rs 4,327 crore the previous year.

 

The credit to the priority sector has also improved 36.9 per cent to Rs 28,540 crore in 2002-03 from Rs 20,845 crore.

Credit to the housing finance sector has nearly doubled to Rs 12,308 crore from Rs 6,203 crore while that to the non-banking finance companies has risen by 138.68 per cent to Rs 4,399 crore from Rs 1,843 crore.

The bank credit to the wholesale sector has fallen by 25.82 per cent to Rs 9,481 crore from Rs 12,595 crore.

The total gross bank credit to these sectors has risen by 58 per cent to Rs 84,678 crore in 2002-03 from Rs 53,587 crore in 2001-02.

According to the RBI the increase in non-food credit was well distributed across industries such as infrastructure, housing, cement, cotton textiles, gems and jewellery, iron and steel etc.

Bank credit flows to the commercial sector included their investments in commercial paper, shares, bonds and debentures, mutual fund units etc. These are non-SLR investments.

The share of such investments in the commercial sector credit has doubled since 1997-98. This according to the RBI is indicative of a shift of portfolio choice for tradeable assets as against traditional loans and advances.

Banks investments in commercial paper has shown a drop of 49.8 per cent to Rs 4,258 crore in March 2003, while investment in shares is up by 52.4 per cent to Rs 9,017 crore. The total non-SLR investments has risen by 14.85 per cent for the period to Rs 93,036 crore.