Loan growth to India Inc sputters to just 0.1% so far this year

Religare Institutional Research, in a report dated July 1 said that overall credit growth for FY17 is unlikely to improve above 12%.

The total credit decline in micro, small and medium enterprises was 8% y-o-y. Photo: Pixabay

Despite having the highest share of credit under non-food credit (40%), loans given to India’s manufacturing sector rose by just 0.1% since January this year.

Growth this sector in May 2016 was marginal at 0.9% year-on-year basis as compared to 5.2% in the previous year. The loan given to this sector in May 2015 was Rs 26,389 million which remained flat even in May 2016 at Rs 26,633 million.

The total credit decline in micro, small and medium enterprises was 8% y-o-y, which was down for the fourth straight month.

While the overall non-food credit growth given by the banks to companies or individuals was stable at 8.4% on a year-on-year basis in May 2016 as compared to April 2016. Parag Jariwala and Vikesh Mehta of Religare Institutional Research, in a report dated July 1 said that overall credit growth for FY17 is unlikely to improve above 12%.

Under the agriculture sector, credit to this sector grew at 15.6% year-on-year basis, which was above the system average of 8.4%. Agriculture sector's total share in the credit remained stable at 13.7%.

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