BackNon-food bank credit growth falls again
On 18 October, growth fell to 17% from a year ago, the lowest in about two months
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After reaching a high of 18.4% in early September, non-food bank credit growth has been trending downwards. On 18 October, growth fell to 17% from a year ago, the lowest in about two months. That, however, wasn’t entirely unexpected.
The reason for the increase in bank credit was owing to firms switching their borrowing from the money market to banks as the central bank hiked short-term rates to defend the rupee. With the central bank now cutting the marginal standing facility rates, commercial paper rates have fallen by up to 3.6 percentage points in some maturities.
To be sure, some banks have guided for better credit growth based on the cabinet committee on investment clearing projects, etc., but that has to be seen in numbers before it can be believed.
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