Amid war situations, given the significant price rise in commodities, depreciating rupee and borrowing costs, working capital requirement is likely to increase by 28 per cent to Rs 11.2 lakh crore in FY22 as against it in FY22. 8.7 lakh crore was Rs. ,
The agency had earlier estimated this to rise to Rs 9.7 lakh crore in the pre-war situation.
Surge in credit growth from industry and services sectors due to increase in working capital requirements may remain a tailwind for the banking industry in FY13. It said an increase of Rs 1.5 lakh crore in working capital credit due to macro events would lead to a 1.25 per cent year-on-year growth in the total bank credit book.
Although financing conditions are still benign, rising interest rates will increase the cost of borrowing. The current uncertain business environment may affect companies with weak credit profiles and may face challenges in accessing finance.
The report said units with weak credit metrics whose interest coverage ratio is less than 1.5 times may see a sharp jump in working capital demand by Rs 1.26 lakh crore in the post-war case, up from 41,000 in the pre-war case. crore was Rs.
Stating that commodity-intensive sectors will face higher working capital requirements in view of the steep rise in commodity prices, the agency said the sectors which will have maximum impact are aviation, capital goods, cement and chemicals.
The prices of commodities such as metals, food and energy have risen sharply since the Russo-Ukraine war and the resulting supply chain disruptions.
Credit to small businesses has already been on the rise since the COVID pandemic due to higher commodity prices, an increase in receivables and a corresponding increase in creditors. Though most entities operate on a fixed-margin basis, where costs are mostly passed on to larger entities, the inventory requires financing, it said.