Bank credit grew 6.8% in October, compared to 5.1% in the same period a year ago, show the latest figures published by Reserve bank of India (reserve Bank of India)
The outstanding loan amount as on October 22 was ₹110.5 lakh crore, which was ₹7 lakh crore in a year.
The pick-up is largely due to push from government schemes, even as large corporates and top rated borrowers continue to rely on capital markets and forex hubs where they manage to raise funds at much cheaper rates. Huh. India’s weighted average lending rate stood at 7.2% in September, according to RBI data.
Plus, triple-A rated five-year corporate bonds had average rates of 6% and three-year maturities at 5.29%, as shown by Bloomberg data compiled by ETIG.
The latest data on sectoral inflows of credit offtake shows that lending to medium-sized firms grew 49% year-on-year to ₹1.75 lakh crore as of September-end compared to the same period a year ago.
Most of the lending is considered under the government’s Emergency Credit Line Guarantee Scheme (ECLGS) MSME sector, under which the government provides 100% guarantee to banks in respect of eligible credit facilities extended to their borrowers.
In addition, consumer durable Loan With an increase of 40% as compared to 14.9% in the same period a year ago, borrowers have taken advantage of lower interest rates. With the government’s renewed emphasis on the social sector, infrastructure lending more than doubled to ₹1,323 crore in September from ₹1,081 crore a year ago.
On the liability side, the pace of deposit taking slowed marginally to 9.9%. But deposit growth is still moving forward credit enhancement.
In absolute terms, banks almost doubled the deposits amounting to ₹14 lakh crore during this period.