DFS Secretary Sanjay Malhotra The share of industries in total lending by banks has declined by 16 percentage points to 26 per cent in the last decade, the U.S. said, and needs to be increased.
He said that the retail sector has seen the highest credit growth over the years and banks are focusing on the same.
Also big. as there have been changes Reliance A structural shift on corporate bonds and towards the services sector in the economy, he said.
A few years ago, banks were persuaded by policy makers to not lend so much to the industrial segment given the experience of one-time soured loans, but instead focused on retail lending to meet financial inclusion priority.
Addressing the bankers in the industry lobby, Malhotra said, “We have to take all sectors together. We have seen that credit to industries has come down in the last few years.” Indian Banks Associationof the Annual General Meeting here.
Listing the figures of decline in the composition of credit to industry in the overall pie over the last decade, he said, “We need to take that space back, we need to support it (credit to industry) as huge multipliers. The effect that investment in credit to industries has on the economy.”
Over the past few quarters, the industry has undertaken a massive de-leveraging exercise due to the high profits made during the pandemic, instead of using the space for fresh investments. Experts say the lack of clarity on demand has made them opt for it, even though reserve Bank of IndiaSurveys are pointing to an increase in capacity utilization rates.
Malhotra, who oversees the government’s stake in state-owned financial institutions, also urged private sector lenders to pull their socks up and help the government achieve policy objectives on financial inclusion.
He said that the contribution of private sector banks in the accounts opened under PM Jan Dhan Yojana is only 3 percent, from 4 percent. Pradhan Mantri Jeevan Jyoti Bima Yojana and PM Suraksha Bima Yojana, and 7 per cent each to Atal Pension Yojana and Kisan Credit Card.