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Non-food credit grows 11.38% during fortnight till March 2

It had recorded a 4.34% y-o-y growth in the corresponding fortnight of the previous year

Non-food bank credit grew 11.38 per cent year-on-year (y-o-y) during the fortnight ended March 2, marginally lower than 11.59 per cent in the last fortnight.

According to provisional data released by the Reserve Bank of India (RBI), outstanding loans to companies and individuals stood at Rs 83.03 lakh crore on March 2, up from Rs 82.06 lakh crore on February 16 and against Rs 74.55 lakh crore a year ago.

Non-food bank credit had recorded a 4.34 per cent y-o-y growth in the corresponding fortnight of the previous year. The net corporate bonds outstanding at the end of December 2017 was Rs 26.47 lakh crore, up 16 per cent from Rs 22.77 lakh crore at the end of December 2016, as per data released by the Securities and Exchange Board of India (Sebi).

Data from RBI showed that the net outstanding on commercial papers stood at Rs 4.55 lakh crore as on February 28, up 22 per cent from Rs 3.73 lakh crore as on February 28, 2017.

Taken together with the outstandings on corporate bonds and CPs, the total outstanding credit in the system adds up to around Rs 114.05 lakh crore, up 13 per cent from Rs 101.05 lakh crore in the comparable period last year. Data on outstandings on corporate bonds for the first three months of 2018 are not available yet.

However, credit offtake i the banking system alon may not be fully reflective o loan disbursements in the economy, and taking cognisanc of the growing role of non-banking financial companies (NBFCs) is merited. The top nin NBFCs saw disbursements soar 67 per cent y-o-y for the nine-month period between April 2017 and December 2017 t Rs 2.69 lakh crore.

The double-digit growth numbers in bank credit may be difficult to sustain, though. Earlier this month, ratings agency Icra said the impact of a higher base may start to pull down growth figures from March onwards.

“With higher base of March 31, 2017, the credit growth is expected to taper down with estimated credit growth of 9-9.5 per cent for the sector (banking) by March 31, 2018. Going forward, the impact of risk aversion after recent fraud in one of PSBs (public-sector banks) on overall credit growth is to be seen.”

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