Mumbai: Banks reported credit growth of 7.9% year-on-year (y-o-y) for the fortnight ended 11 February, mainly driven by retail loans, CareEdge Ratings (formerly Care Ratings) said in a note.
However, it declined sequentially by approximately 30 bps from the previous fortnight ended on 28 January, it said. In absolute terms, credit outstanding stood at ₹115.5 trillion, increasing by ₹8.4 trillion over the last twelve months.
Credit growth, the rating agency said, had been muted from February 2020 to July 2021 due to covid-19 outbreak and deleveraging of balance sheet by large corporates, also hesitant to undertake fresh capex due to growth uncertainties and lower utilization.
Further, in the past two-three years, credit growth was also depressed due to resolution of high value bad loans which pushed down the headline numbers. With the high value corporate non-performing assets (NPAs) resolution now seemingly under control, the pressure on corporate headline numbers now looks better, it said.
With the union budget 2022-23 focusing on the expansion of capex and infrastructure, credit demand may pick up from industry.
Credit outstanding of the retail segment rose by 11.4% y-o-y in January due to growth in housing, vehicle, and other personal loans driven by an uptick in economic activities, festive seasons, low-interest rates and higher discounts.
