Agl credit down by Rs 9,000 crore- Gaping Credit Gap K. Ramasubba Reddy
Year-on-year Growth shows rosy picture, but : |
As perdata at a disaggregated level drawn from 49 banks accounting for 95 per cent of total bank credit, the year-on-year growth in bank credit to industry as of August 2009 was lower than that in the previous year. While the credit flow to agriculture, real estate and NBFCs remained high, it was lower for housing. NBFCs remained high, it was lower for housing.
|
| Table 13: Annual Sectoral Flow of Credit |
| Sector |
As on August 29, 2008 (y-o-y) |
As on August 28, 2009 (y-o-y) |
| Amount (Rs.crore) |
% share in total |
Variations (%) |
Amount (Rs.crore) |
% share in total |
Variations (%) |
| Agriculture |
41,185 |
8.5 |
18.6 |
67,228 |
21.8 |
25.6 |
| Industry |
2,30,229 |
47.5 |
32.9 |
1,66,121 |
53.8 |
17.9 |
| of which: |
|
|
|
|
|
|
| Micro and Small |
23,865 |
4.9 |
20.1 |
40,146 |
13.0 |
28.1 |
| Real Estate |
20,580 |
4.2 |
43.1 |
28,353 |
9.2 |
41.5 |
| Housing |
29,872 |
6.2 |
12.4 |
14,668 |
4.8 |
5.4 |
| NBFCs |
26,443 |
5.5 |
51.8 |
23,837 |
7.7 |
30.8 |
| Overall Credit |
4,84,805 |
100.0 |
26.5 |
3,08,718 |
100.0 |
13.3 |
| Note: Data are provisional and relate to select banks which cover 95 per cent of total non-food credit extended by all scheduled commercial banks. |
Source: RBI- Q2 OCT 09 Monetary Policy Review |
But Y-O-Y growth does not reflect correct position-Agri credit declined by -2.6% :
|
Trends in Bank in Credit-Mar 09- Aug 09 (Rs in Crore) |
| Sector |
Mar 09 |
Aug 09 |
Differnce |
% |
| NFBC* |
26,02,000 |
26,24,000 |
+22,000 |
0.8% |
| Agriculture@ |
3,38,600 |
3,29,800 |
-8,800 |
-2.6% |
| Industry |
10,53,400 |
10,97,000 |
+42,600 |
+4.0% |
|
*NFBC=Non-Food Bank Credit, Source: RBI Statistics @Target for March 10-Rs 4,60,000 crore.
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Disaggregated data from April 09 to August 09 on sectoral deployment of gross bank credit however show that while there was an increase of 4% (Rs 22,000 crore) in industrial credit, there was actual decline in agricultural credit by -2.5% (Rs 8,800 crore). Growth rate of NBFC IS ALSO LOW AT LESS THAN 1%.
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| Banks mandated target for outstanding agri loans by Mar 2009 was Rs 4,00,000 crore. There was a huge gap of Rs 61,000 crore as actual agri outstanding credit was Rs 3,39,000 crore. In order to achieve mandated 18% target of Agri loans by March 10, agri loans outstandings should reach a level of Rs 4,60,000 crore. As of Aug 2009, the agri loan outstandings are only Rs 3,30,000 crore. The gap in agri lendings to be bridged by March 10 is a whopping Rs 1,30,000 crore. There is going to be a huge shortfall again in extending mandated agri loans during the current year too. |
Resource flow to commercial sector drops : |
| The main reason for drop was a 50.75 per cent decline in non-food credit growth to Rs 1,18,257 crore during the first half of the year, as against Rs 2,40,092 crore during April-September 2008. |
While the growth rate for public sector banks more than halved from 32 per cent during the year up to October 10 last year to 15 per cent in the year up to October 9 this year, they were still better off than private banks (2.5 per cent this year versus 19.7 per cent in the year up to October 10, 2008) and foreign banks, which witnessed a 15.9 per cent contraction (against 32.9 per cent increase a year ago). |
Aggregate deposits of scheduled commercial banks are projected to grow at a lower level of 18 per cent (19 per cent).
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With the growth in bank credit to the commercial sector moderating significantly to 10.7 per cent from the high level of 27.4 per cent a year ago, the RBI pared the growth in adjusted non-food credit to 18 per cent (20 per cent).
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Loans to the real estate sector grew 41.5 per cent in the 12 months up to August 28, 2009, to Rs 96,701 crore. On the other hand, total non-bank food credit grew 13.3 per cent in the 12 months up to August 28, 2009, to a total outstanding of Rs 26,23,551 crore. RBI has therefore increased provisioning requirement from 0.40 per cent to 1 per cent for advances to this sector which are classified as ‘standard assets. |
| RBI survey lowers growth outlook to 6% : |
| The projection for sectoral growth rate for agriculture projected at -1.4 per cent, whereas for industry the projection at 6.3 per cent. For services, the forecaster is 8.1 per cent. |
| Monetary measures: * The bank rate, repo rate, reverse repo rate and CRR unchanged at 6%, 4.75%, 3.25% and 5%, respectively * SLR raised to 25% of NDTL * GDP growth target for FY10 unchanged at 6% with an upside bias; RBI warns agricultural output is likely to be lower than in the previous financial year Key objectives: * RBI projection of inflation by the end of March 2010 revised to 6.5%, with an upside bias, from the earlier target of 5% . |
| Statutory Liquidity Ratio (SLR) was hiked by one percentage point to 25 per cent. The hike doesn’t impact banks as their current aggregate SLR investment-deposit ratio is 33 per cent. |
K.R.S.Reddy , Hyderabad , says: What is new about credit policy? PM and FM have already announced that there will be no increase in interest rates. RBI governor meets PM and gets the briefing. And hey presto! RBI parrots PM/FM words and gets pat on the back saying well done boy be obedient. Is this what is expected of RBI? The main job of RBI is to check inflation and nothing is done in that direction. And we are going to have run away inflation with too much money (read too much fiscal deficit) chasing too few goods.28 Oct 2009, 1235 hrs IST-ET online. |
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