Non-food credit falls to 11.p8%, lowest in 14 months

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non food bank credit, banking sector, banking industry


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Non-food credit growth in the banking system fell for the fifth straight fortnight to 11.98% year-on-year (y-o-y) — a 14-month low — for the period ended June 21, down from 12.26% in the previous fortnight. During the comparable fortnight a year ago, the non-food credit growth stood at 12.86%.

According to provisional data provided by the RBI, outstanding loans to companies and individuals stood at `95.77 lakh crore as on June 21, up from `95.74 lakh crore on June 7 and compared with `85.59 lakh crore a year ago.

Analysts at the Kotak Institutional Equities said: “Muted increase in corporate loans, slowdown in retail unsecured credit and decrease in the sharp pace of growth in lending to NBFCs have led to subdued loan growth.”

Deposits within the banking system grew at 10.02% y-o-y, faster than the sub-10% growth in the previous fortnight. Deposits amounted to `124.90 lakh crore for the fortnight ended June 21, while the credit-deposit (CD) ratio for the fortnight stood at 76.67%, 33 basis point higher than the previous fortnight.

The pace of growth in unsecured retail credit has also reduced to 25% from peak levels of ~35% observed during FY19. The gradual slowdown in retail loans will lead to a drop in the pace of overall loan growth, said market analysts.

Sandeep Bakshi, MD & CEO of ICICI Bank, commenting on the bank’s loan growth outlook for FY20, said: “The bank’s focus is on retail lending and small and medium enterprises. While in corporate lending the bank will focus on better rating mix of more than 67% loans to A- and above compared to 52% in FY16.”

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