Loan demand in April picked up at more than double the pace of last year at 11.3 per cent compared to 4.7 per cent last April as economic activity accelerated across sectors.
A report in the Economic Times shared how loan demand from large companies turned positive, as they are shifting back to banks to meet their funding needs as market rates surge.
Credit to large companies rose 1.6 per cent in April from the same month a year earlier, when it had contracted 3.6 per cent, according to the latest data on the sectoral flow of bank credit released by the ReserveBank of India (RBI).
Credit to medium industries increased 53.5 per cent year-on-year in April this year compared with 44.8 per cent last year. The growth in credit to micro and small industries was 29 per cent against 8.7 per cent a year earlier. Overall, credit to the industry expanded 8.1 per cent against a contraction of 0.4 per cent in April 2021.
“The Reserve Bank’s continuous efforts to maintain adequate liquidity in the banking system, coupled with the government’s efforts to boost credit demand conditions in the economy, was reflected in the pickup in credit offtake by various sectors,” RBI’s latest annual report said. Retail loans too rose faster this year at 14.7 per cent against 12.1 per cent in April 2021, primarily driven by ‘housing’ and ‘vehicle loans’ segments.
Credit growth to agriculture and allied activities continued to be robust at 10.6 per cent; a year earlier, it was 10.7 per cent. Bank credit growth remained robust for the resilient agriculture sector even during the Covid-19 pandemic, with the continued support of the government’s interest subvention scheme, the central bank said.
Loans to the services sector picked up 11.1 per cent in April this year compared with 2.4 per cent a year earlier, mainly due to demand from NBFCs, trade, tourism, hotels & restaurants and transport operators. The services sector, which felt the brunt of the pandemic, is staging a broad-based recovery from the second quarter of fiscal 2022, the RBI said.
