Worried bankers slow lending to commercial real estate, telecom

Worried bankers slow lending to commercial real estate, telecom

The data on sectoral deployment of bank credit contains many little nuggets of information. For instance, the numbers provide confirmation of the anecdotal evidence that bankers are going slow on financing commercial real estate, after bankers have been made the target of investigations into lending to the sector.

While bank loans outstanding to the commercial real estate sector amounted to Rs105,479 crore as on 19 November 2010 (the previous date on which the Reserve Bank of India provided detailed information on the sectoral credit data), they were Rs105,884 crore as on 28 January, a minor increase of Rs405 crore.

Loans outstanding on account of the individual housing sector, on the other hand, increased by 3.1% over the period to Rs337,387 crore.

It does seem probable that the scandals and uncertainty in the telecom sector have taken their toll on bankers as well, for loans outstanding to that sector have declined. As on 19 November, loans outstanding to telecom were Rs97,729 crore, while they were lower at Rs96,299 crore as on 28 January.

Another sector in which there has been a decline in loans outstanding over the period has been micro credit. Loans outstanding declined by a hefty 11.4% between 19 November and 28 January to Rs25,077 crore. This is most likely the fallout of the Andhra Pradesh crackdown on microfinance, although it is surprising that even bank-funded microfinance lending has been affected.

Worries about credit card exposure also do not seem to have abated and loans outstanding on account of credit cards declined marginally from Rs18,908 on 19 November to Rs18,728 crore on 28 January.

Which sectors showed decent loan growth over the period? The infrastructure sector, except for telecom, was a big beneficiary, with loans outstanding increasing by 3.6% to Rs499,663 crore.

Loans outstanding on account of non-banking financial companies also increased substantially by 13.8% to Rs153,962 crore. Vehicle loans went up by 5.7%.

Loans outstanding on account of petroleum, coal products and nuclear fuels also went up by 5.7% as crude oil prices increased.

The overall growth in non-food credit over the period was 5.1%.

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