First time in 14 months, credit to industry expands

Written by Sandeep Singh | New Delhi | Updated: January 12, 2018

HINTING AT a revival in the economy, the industrial sector witnessed an expansion in credit growth for the first time in 14 months in November 2017 over the same period the previous year.

According to RBI data released Thursday, gross bank credit expanded 8.3 per cent in November, and credit off-take by the industry by 1 per cent. The contraction in credit growth to the industry since October 2016 had hit a low of (-)5.2 per cent in February 2017, while the gross bank credit growth stood at 3 per cent in the same month. The credit outstanding to the industry, which stood at Rs 27,30,300 crore in March 2016, had come down to Rs 25,99,100 crore in October 2017 as a result of decline in credit growth numbers and year-on-year contraction since October 2016. In November, it expanded to Rs 26,04,000 crore for the first time since the government announced its demonetisation policy in November 2016.

Data show that credit growth to the industry was driven by expansion to sectors such as food processing (9.9%), textiles (4.6%), chemicals (3.2%), engineering (2.4%) and metals (1%). But the infrastructure sector, which accounts for nearly 34 per cent of the credit demand by industries, witnessed a contraction in credit by 2.3 per cent in November. Data further show that while micro and small industries, and large industrial units, saw expansion in credit growth in November, the medium scale industries continued to see a contraction (-8.3% in November 2017).

“The movement is positive and we have also seen reassuring numbers for exports and PMI but it must be noted that the credit growth numbers for the industry come on the back of a weak base, and we can’t say it is a full fledged recovery. We have to wait for data for few more months to reach any conclusion,” said D K Joshi, chief economist, Crisil.

Voicing a similar opinion, D K Pant, chief economist, India Ratings, said, “It is too early to say that the industry is out of the woods. There is some anecdotal evidence that points towards investment green shoot but it is mostly because of the base effect. It, however, shows that stability is returning post-demonetisation and implementation of GST, and industry is looking for investment for their working capital requirement.”

Other than industries, the services sector too saw a sharp rise in credit growth in November 2017 at 14 per cent, which is the highest since September 2016, with the exception of a 19.5 per cent growth seen in March 2017. The credit growth for the services sector had slipped to a low of 4 per cent in May 2017 and stood at 7 per cent in September 2017.

Even the personal loan segment witnessed the fastest pace of growth since September 2016. In November 2017, the credit growth for the personal loan segment that comprises housing loan, vehicle loan and other personal loans expanded by 17.3 per cent. Both services sector and personal loan segment contributed to the uptick in gross bank credit, which expanded to Rs 71,50,100 crore in November 2017 up 8.3 per cent from Rs 65,99,400 crore in November 2016. This was the highest growth registered since September 2016 when the gross bank credit expanded by 11.5 per cent.

Last week, Finance Minister Arun Jaitley said that credit growth in the banking system has started improving slowly. “The last few data that has come out has shown credit growth has moved up and once this infusion of capital takes place into the banking system, credit growth will further move up,” Jaitley had said.

Reference

Comments

Post a Comment

Popular posts from this blog

India Joins Russia in Voting Against West-Backed Move to Expand Powers of OPCW

The Wire: June 28, 2018 New Delhi: India voted against a UK-backed move that will allow the global chemical weapons watchdog to apportion blame for illegal attacks, criticising the decision to grant “unchecked powers” to the head of the group which could be used for “partisan” purposes. On Wednesday, more than two-thirds of the member states of the Organisation for the Prohibition of Chemical Weapons (OPCW) voted to authorise the international body to identify the perpetrators and sponsors of a chemical weapons attack. It also specifically called on the OPCW’s technical secretariat to begin work on identifying the perpetrators behind the use of chemical weapons in Syria. The draft decision, sponsored by 30 countries, was adopted at the fourth special session of the conference of the states parties to the Chemical Weapons Convention at the Hague, with 82 in favour and 24 negative votes. While Europe, the United States and their allies voted ‘yes’, there was strong oppo...
Read more

As financial insecurity rises in urban India, so does investment in insurance

Image
Scroll.in March 13, 2020 Urban Indians are becoming less confident about their financial security. Up to 58% of them fret over financial independence post retirement, which is a 4% increase from last year. An equal share of urban Indians worry about meeting their daily medical expenses and sustaining their current lifestyle once they stop working. The findings are part of a survey published by Delhi-based Max Life Insurance in association with London-based consultancy Kantar. The firms surveyed 7,014 respondents in 25 cities, including six metros, nine tier-1 cities, and 10 tier-2 cities, between December 2019 and January 2020. Source: Max Life Insurance via Quartz The trends Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz Source: Max Life Insurance via Quartz A significant share of urban Indians also say their families will have no financial support in the event of the breadwinner’s death. In such a scenario, around 57% believe the family sav...
Read more

ED tracks Swiss Bank A/Cs of Agusta scamster

The Poineer February 10,2019 Rakesh K Singh The Enforcement Directorate (ED) has tracked a dozen Swiss bank accounts in the name of Rajiv Saxena, who is key accused in the Rs 3,600 crore AgustaWestland VVIP chopper scam. The ED has also found out accounts held by  his family members and associates where the kickbacks in the now scrapped deal were allegedly parked. Two bank accounts are in the name of Rajiv Saxena’s  associates Pankaj Jain and Sumita Jain who are also the authorised signatories. The  third is in the name of another associate Ajit Singh Bubber, but Rajiv and his family members are authorised signatories. The remaining nine accounts are largely owned and operated by Rajiv, his family members and associates. Rajiv Saxena was deported by the UAE authorities on January 30 and the ED formally arrested him the next day and a court later granted his remand to the agency. He is currently undergoing custodial interrogation by the ED. The agency had in 2017...
Read more