Corporate credit growth is seeing a turnaround: SBI
1 min read 16 Dec 2021, 12:48 AM ISTMuch of the credit pick-up is because of increased govt spending in the infrastructure sector
PremiumMUMBAI : Corporate credit growth is beginning to see a turnaround with the credit-deposit (CD) ratio of banks improving after the 20-month lull that came as a fallout of the coronavirus outbreak, according to State Bank of India (SBI) chairman Dinesh Khara. SBI’s CD ratio has improved by as much as 4%, Khara said at the Annual Mint Banking Conclave on Wednesday.
“Ever since the festival season has got over, for the last two months we are witnessing growth in the corporate cycle. The credit-deposit ratio for all banks has started inching up. We have seen an improvement in the credit-deposit ratio by 4%. Retail credit growth continues to do well," he said.
SBI is sitting on an unavailed credit limit of ₹5 trillion, he said. Corporates have started availing the limits, but much of the credit pick-up is because of increased government spending in the infrastructure sector.
“We have a decent pipeline of investment proposals. This is coming from the fact that the government has continued to spend money in infrastructure projects. This has an impact on the core sector of the economy. Apart from the commodity cycle being on an uptick, demand in iron and steel and cement have also seen good demand. This is one of the reasons that we are seeing a pick-up in unavailed limits," he said.
Responding to the record high wholesale inflation of 14.23% in November, Khara said this number is transitory as supply side constraints start getting addressed.
Wholesale inflation, based on the Wholesale Price Index, jumped to 14.23% in November from 12.54% in October on a year-on-year basis, primarily because of a rise in food prices, especially of vegetables and minerals and petroleum products. This comes after the retail inflation print for November had risen to a three-month high of 4.91% despite a cut in excise duty on fuels.
SBI had reported its highest quarterly net profit of ₹7,627 crore at the end of September quarter because of improved asset quality and robust retail demand. Total assets had expanded by 6%, driven by personal loans. The country’s largest lender expects its loan book to grow by 10% this fiscal.
