Credit offtake from banks is gradually gathering steam, going by Reserve Bank of India data. This is underscored by the fact that year-on-year credit growth nudged closer to 10 per cent as on November 24, 2017.
Given the overhang of bad loans, especially in the case of public sector banks, market experts are of the view that these banks had turned risk-averse and reined in lending. However, banks seem to be slowly shrugging off their risk aversion.
In its fifth bi-monthly monetary policy statement, the Reserve Bank of India said: “On the positive side, there has been some pick-up in credit growth in recent months. Recapitalisation of public sector banks may help improve credit flows further.” After plunging to a multi-decade low of 4.1 per cent in May 2017, non-food bank credit has witnessed a rising trajectory every month since June, although it has been lower vis-a-vis the year-ago period.
In June, non-food bank credit growth rose to 4.8 per cent and increased in the following months — July (5.3 per cent); August (5.5 per cent); September (6.1 per cent); October (6.6 per cent). In the fortnight ended November 24, 2017, the banking system’s deposits declined by ₹41,164 crore while credit nudged up by ₹3,524 crore.
Source: The Hindu Business Online
