Fund flows to commercial sector fell 88% in April-September, shows slowdown in investment: RBI data

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October 09, 2019

Fund flows declined from Rs 7.36 lakh crore between April and mid-September 2018 to Rs 90,995 crore in the same period this year.

Fund flows from lending institutions to the commercial sector have declined as much as 88% till mid-September in this financial year, the Reserve Bank of India said in a report on Friday. Such flows collapsed from Rs 7.36 lakh crore between April and mid-September 2018 to Rs 90,995 crore in the same period this year.

This indicates a slowdown in investment activity, which can be attributed to risk aversion and demand slowdown, the central bank said in the Monetary Policy Report for October. Global uncertainties have also weakened domestic investment activity, according to the report.

In the April to mid-September period in 2018, non-banking financial companies lent Rs 41,200 crore to the commercial sector, but this year, the flow reversed – Rs 1.26 lakh crore moved from the commercial sector to the NBFCs. Non-food credit flow from banks also reversed, from Rs 1.65 lakh crore going to the commercial sector to Rs 93,688 crore going to the banks. Among non-banking lenders, public issues by non-financial entities rose over nine times to Rs 58,326 crore.

India’s economy has been faltering in the last few quarters. Economic growth rate slipped to 5% in the April-June quarter, the lowest in over six years, and the outlook is not too good. The Reserve Bank of India on Friday lowered the economic growth rate forecast to 6.1% for this year from 6.9%. International agencies have also revised the projections down.

Core sectors such as automobiles and manufacturing have witnessed a progressive slowdown because of weakened consumer demand and dearth of investments. The government has announced multiple measures to boost the economy in recent weeks.

Reference:-https://scroll.in/latest/939691/fund-flows-to-commercial-sector-fell-88-in-april-september-shows-slowdown-in-investment-rbi-data

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