The bank credit growth to various sectors saw a significant surge in March, even as the economic activity halted in the second fortnight of the month, a report said. The credit to NBFC sector grew by a steep Rs 1.15 lakh crore, the highest since January 2008, the SBI Research's Ecowrap said. The March incremental growth in retail credit stood at 0.36 lakh crore, higher than in February. Similarly, the incremental credit to industry was Rs 1.34 lakh crore, also a 147-month high. The credit to MSMEs stood at a 24-month high of 0.67 lakh crore while infrastructure registered a 12-month high growth at 0.46 lakh crore, the report also said. India has been under a coronavirus lockdown since March 25. The lockdown is expected to be lifted on May 17.
"The increase in working capital limit by banks for companies and also in the last two fortnights, credit increased by Rs 97,910 crore. We believe that banks have extended a substantial amount of credit in the last 7-days of the year ended March 2020 that includes both term loan and working capital loan with companies bracing to tide over the Covid-19 crisis." the report noted.
The report also said that the credit growth contracted by Rs 31,562 crore in the first fortnight of March of the current financial year, implying the customers are using the limits during these uncertain times. "During FY20, the Credit offtake was muted with a growth at 6.1% being less than half the growth of 13.3% in 2018-19, due to low momentum and unfavorable base effects. While, aggregate deposits increased by 7.9% in FY20, compared to 7.8% growth in FY19", it said.
Meanwhile, India may see doubling of bad loans at its banks after the coronavirus crisis brought the economy to a sudden halt, global news agency Reuters reported citing an unidentified senior government official and four top bankers. Indian banks are already struggling with Rs 9.35 lakh crore of soured loans, equivalent to about 9.1 per cent of their total assets at the end of September 2019.
Also read: Congress offers to sponsor lakhs of stranded migrant labourers' train tickets