Bank credit is picking pace in several industrial segments, led by government spending. The total bank credit at the end of April 26 was at Rs 85.24 lakh crore, growing at 11.7% over the previous year. While private capex investments are yet to pick up, the government spending is infrastructure, led by telecom, roads and power sectors have seen a visible pick-up in credit over the previous year. Bank loans to the infrastructure sector have risen 19.9% over the previous year to Rs 10,64,700 crore. Within this segment, the loans to the telecom sector have grown the fastest by 50.2% over the previous year to Rs 129700 crore.
"If the government spending was absent, the credit growth would continue to be in the single digits. Except for working capital requirements, the private sector is not seeing any fresh capex coming in, except in the telecom sector," said a banker.
Government spending has led to an improvement in bank loans to the power and road segments. Loans to the power sector rose 9.8% to Rs 5,69,800 crore. The road sector also saw renewed interest from the banks with credit growing by 14% to Rs 1,86,200 crore. In the year-ago period, credit to the road sector was growing at 13%. Mining and quarrying sector also saw a huge lift in credit with bank loan outstanding to the sector at Rs 41,900 crore, growing at 11.5%. The year to date growth has also been positive at 0.25% in April, the first month of this fiscal.
CREDIT DROP
|
| The sharpest fall in credit has been to the iron and steel industry, where the bank credit decelerated 16% to Rs 2,70,000 crore. This sector has thrown up the largest defaulters including Essar Steel, Electrosteel, Bhushan Steel and Bhushan Power and Steel |
Banks continued to be wary of the textiles, iron and steel, beverages and the leather sector. They have been selectively lending to the gems and jewellery sector. The sharpest fall in credit has been to the iron and steel industry, where the bank credit decelerated 16% to Rs 2,70,000 crore. This sector has thrown up the largest defaulters like Essar Steel, Electrosteel, Bhushan Steel and Bhushan Power and Steel with a total unpaid debt of close to Rs two lakh crore.
Besides the large industrial segment, banks continued to back their retail customers who have created lesser delinquencies. To duck the bad loan problem, most banks have been focusing their attention on the home loans, which are asset-backed, for healthier management of the balance-sheet. The home loan outstanding was at Rs 11,68,600 crore, growing at 18.6% over the previous year, the highest among the retail loan segments. Credit card outstanding at the end of April 26 was at Rs 92,500 crore, growing 26.4% over the previous year. The pace of growth in credit cards has come down from the over 30% reported in the previous years. Banks have been curtailing loans to the students due to high delinquencies.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Bank credit")
)
Banks continued to be wary of the textiles, iron and steel, beverages and the leather sector. They have been selectively lending to the gems and jewellery sector. The sharpest fall in credit has been to the iron and steel industry, where the bank credit decelerated 16% to Rs 2,70,000 crore. This sector has thrown up the largest defaulters like Essar Steel, Electrosteel, Bhushan Steel and Bhushan Power and Steel with a total unpaid debt of close to Rs two lakh crore.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}