Demand for credit remains lower compared to last year: RBI

All sectors, except agriculture, see slowdown

Demand for credit this year is slow, the latest Reserve Bank of India data released today showed. According to the report, sectoral deployment of bank credit overall non-food credit growth was 14.6% in January 2013 compared to 15.9% in January last year.

All major sectors except agriculture had lower credit demand compared to last year, RBI said. Agricultural loans showed healthy growth, rising 19.8% as against 6.3% last year. This is despite of some parts of the country facing severe drought situation this year.

Credit to industry grew at 15.2% in January 2013 year on year compared to 20.2% in January 2012. “Deceleration in credit growth to industry was observed in all major sub-sectors, barring chemicals and chemical products; petroleum, coal products and nuclear fuels; beverage and tobacco; leather and leather products; wood and wood products; rubber, plastic and their products; and cement and cement products” RBI said.

Credit to services sector grew by 12% compared to 15.1% a year ago.

Credit to non banking financial companies (NBFCs) grew by 21.6% compared to 30.6% observed in last January.

NBFCs have been observing a relatively lower credit growth this year due to slowdown in the economy. As demand for credit slowed down fundraising by them from all sources (including bonds) have come down vis-à-vis last year.  

Personal loans showed a flat growth rising by 13.5% compared to 13.2% last year.

Year till date credit growth (April 2012- January 2013) is 8.4%. RBI has projected 16% credit growth for this financial year however the projection appears to missing by at least couple of% bankers said. “We expect 14% credit growth for the industry this year” M. Narendra, chairman and managing director, Indian Overseas Bank said.