Credit expansion moderates during 2008-09
CREDIT TO PRIORITY SECTOR, INDUSTRY & EDUCATION SHOWS ROBUST GROWTH
The Economic Survey 2008-09, presented in the Parliament today, says that expansion of credit by the Banks moderated during the year. Credit by the Scheduled Commercial Banks (SCBs) to the Commercial Sector in the year 2008-09 expanded by 16.9% as compare to 21.0% in 2007-08. Bank credit to the Commercial Sector witnessed strong growth in the first half of the year and decelerated during the second half.
There was a moderation in the credit growth rate of SCBs to 17.3% ( Rs. 408099 crore in 2008-09) from a level of 22.3%(Rs. 430724 crores) in the corresponding period of the previous year. The total credit flow from SCBs as on March 27, 2009 was Rs. 27,70,012 crore, of which Rs. 20,11,591 crore was from the Public Sector Banks (PSBs). PSBs registered a growth of 20.4% in 2008-09 compared to 22.5% in the previous year. Non food credit at the end of March, 2009 grew by 17.5 percent as compared to 23.0 percent growth at the end of March, 2008.
While loans to agriculture and allied activities grew at the rate of 23.0% as compared to 19.5% in the previous year, credit to industry grew at 21.6% during 2008-09 as against 2.43% in the last year. Advances under personal loans for housing and consumers durables witnessed deceleration. Loans to commercial real estates and NBFCs remained high in 2008-09 with a growth of 44.6 and 25.1% respectively. The private sector lending was up by 22.5% compare to 17.5% from year to year basis as did the education lending with 39.2% growth in 2008-09 compare to 35.0% in the last year.
Though the growth in the different sources of funds for the SCBs during 2008-09 was lower than for 2007- 08, the growth in deposits with the banking system in 2008-09 was higher than the growth of credit. The credit – deposit (C-D) ratio peaked to 75.2 as of October, 2008 but declined thereafter. It stood at 72.3 as of March 27, 2009.