The disbursement of credits is accelerating until the end of the year

Credit growth of all listed banks increased by 8.42% year-on-year (year-on-year) as of March 11, 2022, compared to growth of 6.36% year-on-year as of March 12, 2021, according to data from the Reserve Bank of India (RBI).

Credit disbursement appears to have picked up over the past two fortnights even as the fourth quarter and fiscal year 22 draw to a close. Banks disbursed loans amounting to ₹74,826 crore in the fortnight ending 11 March 2022 and ₹79,149 crore in the previous fortnight.

In a recent note, CARE Ratings observed that retail credit has been the main driver of total credit utilization, but the recovery in business credit growth due to the overall improvement in business activity is supporting also overall credit growth.

With the 2022-2023 Union budget focused on expanding capital expenditure and infrastructure, demand for credit could increase from the industry, the rating agency said.

CARE Ratings said the outlook for bank credit growth is expected to be between 8 and 9 percent for FY22 with a weak base effect, economic expansion, increased public and private investment (in particular, investment for renewable energy and production-linked incentives/PLI programs), expanded support for ECLGS and a push in retail credit.

The medium-term outlook looks promising with less corporate stress and increased provisioning levels at banks, he added.

Deposits of all scheduled banks grew at a slower pace (by ₹62,302 crore) in the reporting fortnight from ₹91,145 crore in the previous fortnight.

Published on

March 24, 2022