For the first time in 2019, India achieved positive credit growth according to report on Sectoral Deployment of Bank Credit. According, to the report credit grew in MSME, Construction, Agriculture and Personal Loans. The data collected from 39 selected commercial banks that account for about 90% of total non-food credit positioned by the banks during September.
Few Important Details of the Report
Agriculture sector grew at 7.0% compared to 5.8% in September 2018. Similarly, industrial credit growth accelerated by 2.3%, while personal loans have grew to 16.6% from 15.5% of September 2019. On the other hand, a drop in non-food bank credit to 8.1% this year against 11.3% of September 2019. Likewise, a deceleration in the services sector has been noted with a sharp decrease to 7.3% against 24.0% the previous year.
The Sectors that Noted Credit growth
The two sectors that have seen major growth are agriculture and industrial.
Currently within Industrial sector credit growth reported in infrastructure, construction, cement, beverage, tobacco, paper, and its products and all engineering sectors. However, a minor reduction in credit growth observed in food processing, textiles, chemicals and chemical products. Further, the data revealed 9,700 crores increase, while 8,200 crores accounted for by Micro Small and Medium Enterprises (MSME).
Earlier this year, SBI Eco wrap report suggested decline in credit of MSME Sector by Rs 1200 crore in April. However, credit increased at exceptionally rapid pace to Rs 1.08 lakh crore by MSMEs and housing/construction. Thereby raining the credit growth higher. For instance, MSME alone contributed about 85% of the industry credit in September.
Despite the higher credit growth, the extent of demand slowdown in the economy is still significant and is estimated to take a longer time to resolve.