Banks banking upon service sector for their credit growth –RBI Data
Covid Times have changed the Business Dynamics completely and so has changed the Bank Lending climate and sectoral preferences. As per RBI data released this week collected for select 33 scheduled commercial banks the credit growth to the services sector accelerated to 9.5 per cent in October 2020 from 6.5 per cent in October 2019 (YOY Basis).
Interestingly, within this sector, credit to ‘professional services’, ‘computer software’ and ‘trade’ registered accelerated growth in October 2020 vis-à-vis the growth in the corresponding month of the previous year. Infarct, though service sector also falls in MSME category bankers always showd their lukewarm attitude for this sector earlier.But now they have opened up for this sector too positively New Startups in these sectors certainly need a push up .
Credit growth to agriculture and allied activities accelerated to 7.4 per cent in October 2020 from 7.1 per cent in October 2019—augers well for bank bank credit sentiment for diversification in agricultural sector.
Within industry, credit to ‘food processing’, ‘petroleum, coal products & nuclear fuels’, ‘leather & leather products’, ‘paper & paper products’ and ‘vehicles, vehicle parts & transport equipment’ registered accelerated growth in October 2020 as compared with the growth in the corresponding month of the previous year. However, credit growth to ‘beverage & tobacco’, ‘rubber plastic & their products’, ‘chemical & chemical products’, ‘cement & cement products’, ‘all engineering’, ‘gems & jewellery’, ‘infrastructure’ and ‘construction’ decelerated/contracted.
Credit to industry contracted by 1.7 per cent in October 2020 as compared with 3.4 per cent growth in October 2019 mainly on the back of contraction in credit to large industries by 2.9 per cent in October 2020 (4.2 per cent growth a year ago), though credit to medium industries registered a robust growth of 16.7 per cent in October 2020 (1.2 per cent a year ago).