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Credit slowdown unlikely, says Crisil

Newswire18  |  Mumbai 

A further slowing in credit growth is unlikely as companies may not postpone their capital expenditure plans, according to Crisil Managing Director and Chief Executive Officer Roopa Kudva.
According to the Reserve Bank of India's data last week, bank credit rose 23.3 per cent in the year to November 23 from 28.8 per cent a year ago.
Banks' credit growth in the second half of the current financial year has remained subdued following the series of monetary tightening steps by the Reserve Bank of India in the last three years. RBI projected a credit growth of 20-25 per cent in 2007-08 compared with 29 per cent clocked by banks last year.
However, pressure on profitability of banks and companies are building up due to rising interest rate and input costs, Kudva said on the sidelines of a conference on developing India's municipal bond market.
Interest rates in the banking system have gone up by 300-350 bps in the last two years, resulting in pressure on profitability of banks and companies. For the first time in five years, Crisil has given more downgrades than upgrades in ratings to companies, Kudva said.
"I don't think it is time to be concerned, but it is time to be cautious," she said.

First Published: Tue, December 11 2007. 00:00 IST