Is bank credit picking up?
To answer that question, comparing bank credit growth with a year ago would be the wrong thing to do, because a year ago was the time of demonetisation. Instead, the accompanying chart looks at bank credit growth over different sectors over three months or so, between 18 August and 24 November 2017, the latest date for which numbers relating to sectors are available.
The chart shows that non-food credit growth was 2.9% over the three-month period, which isn’t much, but does show a pick-up. Unfortunately, bank credit to industry continued to contract. 60% of the growth in outstanding credit over the period was to the services sector. Another 38% went to personal loans. Growth in housing loans was lower than for “other personal loans”.
The numbers show that lop-sided growth continues, with industry continuing to languish, while consumption-based lending remains strong and the services sector is doing well.
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