Credit-growth at historic low; is it actually true?
Though credit growth is declining, but at the same time what needs to be look at is the expansion through non-banking channels and debt markets.
The credit growth has touched historic lows in the last financial year. In the current fiscal till August 4, 2017, there has been an incremental credit de-growth of Rs 1.1 lakh cores, according to Reserve Bank of India (RBI) data.
But, is it actually the case?
What RBI data is showing is one side of the story as credit per se has been expanding through non-banking channels, primarily in the debt market, a report said.
If you look at the data by the central bank, credit growth in FY17 dropped to six decades low at 5.1%, which is the lowest since FY1953, when it grew at 1.8%.
State Bank of India (SBI) in its Ecowrap report said that industries that saw a more than proportionate rise in loan funds corresponding to bank credit are cement, pharma, and auto ancillaries, which have been resorting to debt market like overseas funds, ECBs, institutional borrowing, mutual funds etc and not banks.
A Historic Low: What's really happening with bank credit growth?
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