LIVE TV
ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Budget 2021
  • Personal Finance
    • PPF
    • Mutual Funds
    • Income tax
    • EPFO
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
    • SIP calculator
    • SWP Calculator
    • MF Returns Calculator
    • Lumpsum Calculator
  • India
    • Companies
    • Property
    • Startups
    • Uidai
  • Economy
    • Aviation
  • Tech
    • Mobiles
    • Apps
  • Auto
    • Cars
    • Bikes
  • Markets
    • Commodities
    • Currency
  • Jobs
  • Indian Railways
  • World
    • Economy
    • Politics
    • Markets
  • videos
  • photos
  • Authors
  • More ...
    • VIDEOS
    • PHOTOS
Read in App
Business News » Companies News

Credit-growth at historic low; is it actually true?

Though credit growth is declining, but at the same time what needs to be look at is the expansion through non-banking channels and debt markets.

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
Credit-growth at historic low; is it actually true?
Representational Image: Photo: Pixabay
Written By: ZeeBiz WebTeam
Updated: Sun, Aug 20, 2017
12:39 pm
Mumbai, ZeeBiz WebDesk
RELATED NEWS
Contactless banking to be the new paradigm: Fin Services Secretary Rajiv Kumar Contactless banking to be the new paradigm: Fin Services Secretary Rajiv Kumar
Don't let PNB fraud halt business lending: ASSOCHAM to Arun Jaitley Don't let PNB fraud halt business lending: ASSOCHAM to Arun Jaitley
FM Arun Jaitley should focus on rural economy, affordable housing in Budget 2018: Arundhati Bhattacharya FM Arun Jaitley should focus on rural economy, affordable housing in Budget 2018: Arundhati Bhattacharya
Base effect lifts credit growth to 10.65% in December Base effect lifts credit growth to 10.65% in December
Certificate of Deposits fall below Rs 1 lakh crore for the first time in a decade Certificate of Deposits fall below Rs 1 lakh crore for the first time in a decade

The credit growth has touched historic lows in the last financial year. In the current fiscal till August 4, 2017, there has been an incremental credit de-growth of Rs 1.1 lakh cores, according to Reserve Bank of India (RBI) data.  

But, is it actually the case?

What RBI data is showing is one side of the story as credit per se has been expanding through non-banking channels, primarily in the debt market, a report said. 

If you look at the data by the central bank, credit growth in FY17 dropped to six decades low at 5.1%, which is the lowest since FY1953, when it grew at 1.8%.

State Bank of India (SBI) in its Ecowrap report said that industries that saw a more than proportionate rise in loan funds corresponding to bank credit are cement, pharma, and auto ancillaries, which have been resorting to debt market like overseas funds, ECBs, institutional borrowing, mutual funds etc and not banks. 

"Where sectors reporting decline in loan funds in listed corporates may contradict with increase exhibited in RBI sectoral credit deployment, we are compelled to believe that credit has flown to MSME unlisted entities," the report said.

"Overall, this augurs well for lenders who appear to be derisking and reworking their model for a better tomorrow. However, sectors such as credit to automobiles and auto-ancillaries may require some rethinking by traditional lending channels."

Further, the report revealed two major results: Firstly, it said interspersing RBI's sectoral deployment of bank credit data with sectors filtered from listed corporate loan funds data, shows there is a more than proportionate rise in loan funds compared to growth in the RBI data for the three-year period ended FY17. Secodly, industries that saw a decline in loan funds despite a rise in RBI credit data for the same period. 

Going by sectoral deployment of bank credit, non-food credit grew by 28.3%, or a CAGR of 9%, during FY14-FY17. Within non-food credit, personal loans and loans to agri and allied activities grew 56% during this period yielding a CAGR of 16%, the report added.

But barring these two segments, other non-food credit grew at a snail's pace at CAGR of 5.2% only. 

"Clearly credit to industry barely grew during the last three years. But there are exceptions like services sectors like trade, NBFCs and professional service reported healthy credit growth," it said. 

Also, as per the report, looking at the rating movement of the sectors, upgrade to downgrade ratio is above 1 for all the sectors. This clearly indicates that such sectors because of a better credit profile are able to exploit the non-banking sources also better. 

ALSO READ:
  • A Historic Low: What's really happening with bank credit growth?
  • Bank credit growth will inch up this year but will still remain weak
  • Slowdown in loan growth takes securitisation to all-time high of Rs 1 lakh crore
  • 60-year low credit growth is a warning bell for banks

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
credit growthRBIReserve Bank of Indiacredit growth in FY17debt marketssector-wise credit growthRBI dataSBI EcowrapBank credit
RELATED NEWS
Contactless banking to be the new paradigm: Fin Services Secretary Rajiv Kumar Contactless banking to be the new paradigm: Fin Services Secretary Rajiv Kumar
Don't let PNB fraud halt business lending: ASSOCHAM to Arun Jaitley Don't let PNB fraud halt business lending: ASSOCHAM to Arun Jaitley
FM Arun Jaitley should focus on rural economy, affordable housing in Budget 2018: Arundhati Bhattacharya FM Arun Jaitley should focus on rural economy, affordable housing in Budget 2018: Arundhati Bhattacharya
Base effect lifts credit growth to 10.65% in December Base effect lifts credit growth to 10.65% in December
Certificate of Deposits fall below Rs 1 lakh crore for the first time in a decade Certificate of Deposits fall below Rs 1 lakh crore for the first time in a decade

LATEST NEWS

CBSE Board Exam 2021 Latest News: Class 10, 12 students alert! Controller Dr. Sanyam Bhardwaj says this

Vakeel Saab Collection: Blockbuster! Pawan Kalyan comeback movie sets box office on fire!

FDI Limit in Pension Sector: Modi government may do this soon - All you need to know

MASSIVE! Top 10 best-selling smartphones: Apple grabs 6 places - These 3 iPhones contribute to 71% sales in Jan 2021

Air Bubble agreement: Finalised! Travel between India, Sri Lanka to become easier - Here is how

Upstox customers alert! Very important security breach message for you from your broking firm

Lockdown in Delhi? CM Arvind Kejriwal confirms this after review meeting

Earthquake hits this region of Madhya Pradesh

Indian Railway Stations Development Corporation (IRSDC) invites e-Request for Proposal (RFP) for this railway station development

Aramco signs $12.4 bn infra investment deal with EIG-led consortium

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
Copyright © Zee Media Corporation Ltd. All rights reserved