Banks step up corporate lending

India Inc do up 41% of non-food credit between March and August 2007 as retail loan offtake slows.

With the retail loan demand deceleration down, Banks are stepping up corporate financing. The non-food credit have grown by Rs 13,981 crore between March and August 18, 2007.

Of this, about 41 per cent is absorbed by industry compared with 33 per cent in the corresponding time period last year, according to the Modesty Depository Financial Institution of Republic Of India (RBI) in its study on macroeconomic and pecuniary developments ahead of its mid-term reappraisal of the pecuniary policy 2007-08.

The enlargement of incremental non-food credit to industry during this time period was led by substructure (power, port, telecommunication), textiles, Fe and steel, engineering, petroleum, nutrient processing, chemicals, vehicles and construction.

The substructure sector alone accounted for around 27 per cent of the incremental recognition to the industry as compared with 21 per cent in the corresponding time period of the former year. The depository financial institution recognition to the substructure sector increased by 32.1 per cent to Rs 37,509 crore on August 17, 2007. The agricultural sector absorbed around 13 per cent of the incremental non-food bank recognition growth.

Bank recognition to the commercial sector have seen some moderateness during 2007-08 so far from the strong gait of the former three years. Scheduled commercial banks' (SCBs) non-food credit expanded by 23.5 per cent, twelvemonth on year, as on October 12, 2007, compared with 28.4 per cent at March-end 2007 and 30 per cent a twelvemonth ago.

Personal loan grew by 19.8 per cent to Rs 76,649 crore within which Banks loaning to the lodging sector grew by 16.6 per cent to Rs 33,489 crore.

Personal loans accounted for nearly 22 per cent of the incremental non-food credit within personal loans and the share of incremental lodging loans stood at 44 per cent. The outstanding in recognition card receivables grew by 45.9 per cent to Rs 4,786 crore. Depository Financial Institution recognition to existent estate have also seen a moderation.

Credit flowing to the existent estate sector grew by 52.9 per cent twelvemonth on twelvemonth to Rs 16,145 crore as on August 17, 2007, as against 80.1 per cent growing to Rs 13,262 crore as on August 16, 2006.