During the period, the dependence of petroleum companies were less as they were compensated by the government for under-recoveries through direct subsidy for which it had made a provision in the Budget. The latest data by the Reserve Bank of India suggest that credit flow to industry is not yet broad-based as the growth is mainly driven by the infrastructure sub-sector, iron and steel, chemicals and chemical products, other metal and metal products, and engineering industries.
SECTORAL DEPLOYMENT (Rs CRORE)
|Sep 24, '10*||Absolute||% chg|
|Non-food gross bank credit||31,99,151||1,62,206||5.30|
|Agriculture and allied activities||4,01,933||-13,481||-3.20|
(Small, medium and large)
|Advances against FD||51,379||2,771||5.70|
|Professional & other services||53,370||4,859||10.00|
|*Outstanding as on Source: RBI|
Credit flow to the three segments of the economy -- commercial real estate, personal loan and services witnessed an increase during the year up to September 24, 2010 (see table).
Overall growth in non-food credit during the period was estimated at 20.1 per cent, above the RBI's target of 20 per cent for 2010-11.
Retail loan growth remained flat and credit card advances continued to decline during the year up to September 2010. Bankers said a part of the reason was credit-card holders rolling over their dues as was often seen during economic slowdowns.
Of late, banks are reviving their credit card plans.
"An increase in retail credit (personal credit) reflects growth sentiment. All sectors have done well in April-September this year compared to the same period last year.
Housing loan disbursements have been good. Banks have not raised home loans sharply (even though interest rates have been hardening in the system). Plus, many housing projects have come up," said M V Nair chairman and managing director, Union Bank of India.
On a year-on-year basis, personal loans went up five per cent, compared with a 0.7 per rise in the corresponding period in 2009.
Bank executives said companies were using non-bank sources such as foreign direct investment, foreign institutional investment and external commercial borrowings to fund their credit demand.
"Farmers' demand for crop loans has gone up due to the good monsoon. Investment credit for agriculture will pick up in the second half of the financial year," said a senior executive at a large public sector bank.
The executive added that core sector data was very volatile, affecting the demand for credit.
While there was a slowdown in fresh loan sanctions to the small-scale sector, rubber plastic and other products were the other segments where lenders appeared bullish.
Textiles, construction and gems and jewellery witnessed a moderation in the growth rate.