Growth in commercial credit slows down to 19.6% in June

Hit by high interest rates, growth of commercial credit offtake from banks to major sectors slowed down to 19.6% in June, as against 20.2% in the same month last year.

While the farm sector and industry reported a lower credit offtake in June vis-a-vis the same month of 2010, the year-on-year growth was higher in case of services and personal loans, as per data released by the Reserve Bank of India (RBI) today.

The total outstanding non-food or commercial credit was Rs 37.08 lakh crore in June this year, up from Rs 31 lakh crore in the same month of the previous fiscal.

 

Commercial credit offtake of all sectors combined in June, 2009 was Rs 25.80 lakh crore.

"On a year-on-year basis, non-food gross bank credit increased by 19.6% in June 2011 as compared with 20.2% in the corresponding period of last year," the RBI said.

Earlier this week, the RBI revised downward its non-food credit growth projection to 18% for this fiscal as against the earlier estimate of 19%.

The decline in credit offtake is on account of the RBI's policy of monetary tightening. The apex bank has raised its key policy rates 11 times since March 2010 in a bid to tame inflation, which is currently above 9%.

However, the gross bank credit, which also includes food credit, grew by 20% in June on an annual basis, as against a growth of 19.5% in the same month of 2010.

This is on account of a massive 39.7% jump in food credit during the month under review as against a decline of nearly 8% in June last year.

Food credit had stood at Rs 76,579 crore in June this year compared to Rs 54,811 crore in June last year. Food credit offtake had stood at Rs 59,506 crore in June 2009.

Last fiscal, non-food credit offtake had increased by 21.5%, much above the RBI's projection of 20%.

As per the latest data, total credit to agriculture and allied areas grew by only 12.8% in June 2011 as against a growth of 21.7% in the same month of 2010.

It was Rs 4.53 lakh crore in June, 2011 compared to Rs 4.02 lakh crore in June last year. In June 2009, it was at Rs 3.30 lakh crore.

"Credit to industry increased by 22% [year-on-year] in June 2011 as compared with 29.2% in the previous year...," the RBI said.

On annual basis, total credit to industry -- which includes infrastructure, metals, food processing, rubber, plastic and their products and engineering -- was Rs 16.67 lakh crore in June compared to Rs 13.66 lakh crore in the same month last year.

It was Rs 10.58 lakh crore in June, 2009.

However, there was a moderate increase in the rate of growth of credit offtake from banks to the services sector.

"Credit to the services sector increased by 20.9% [year-on-year] in June 2011, up from 16.2% in the previous year," the RBI said.

The sector saw bank credit growing to Rs 8.92 lakh crore in June this year from Rs 7.38 lakh crore in the corresponding month of last year. In June 2009, the figure was Rs 6.35 lakh crore.

Within services, while segments like transport, computer software, tourism and wholesale trade witnessed slower growth in offtake of credit during the month, the non-banking financial companies saw a big jump.

"Credit growth to NBFCs at 44.5% on a year-on-year basis in June 2011 was significantly higher than that of 25% growth during the corresponding period of the previous year," the apex bank said.

Bank credit to the NBFC segment stood at Rs 1.69 lakh crore in June this year as against Rs 1.17 lakh crore in the same month of last year. Credit to the NBFCs was Rs 93,739 crore in June 2009.

Credit extended to the personal loans sector also went up 17.3% during June 2011, as compared with a growth of 6.6% during the month in the year-ago period.

During the month under review, total credit offtake to the sector stood at Rs 6.95 lakh crore as against Rs 5.92 crore in June 2010. In June 2009, the sector had availed credit to the extent of Rs 5.56 lakh crore.