Decline in outstanding non-food credit continues

Outstanding non-food credit from scheduled commercial banks (SCBs) declined by Rs 70,900 crore in May 2020 from its level in April. This follows a fall of Rs 1.1 lakh crore in April.

The decline in outstanding credit to agriculture and allied sector was 0.56 per cent in May from previous month. In June, it again declined by 0.44 per cent from May 2020.

Credit to industry declined by Rs 22,770 crore from its outstanding level in May. This was a steeper decline than the Rs 20,780 crore fall in the previous month.

Amongst the four broad sectors to which non-food SCB credit is disbursed, the worst fall in outstanding credit during May 2020 was recorded in services followed by industry, personal loans, and agriculture and allied activities.

Personal loans accounted for only 17 per cent of the decline in May after contributing to more than half of the decline in April. This indicates an improvement in credit disbursed for personal loans.

NBFC was the main source of decline in non-food credit to services sectors in May 2020. Since there was sharp increase in March, the fall in May seems to be a correction to this runaway growth.