Bank credit to industry turns around in FY22, infra lending tops Rs 1 trn

Keeping pace with the economic upturn, to industry rose by 7.1 per cent (year on year) in FY22 as against a decline of 0.4 per cent in FY21, when the first wave of pandemic devastated the economy.

The Reserve Bank of India said in a statement that size-wise, credit to medium industries registered a robust growth of 71.4 per cent in March 2022 as compared to 34.5 per cent last year. Credit growth to micro and small industries accelerated to 21.5 per cent from 3.9 per cent and credit to large industries recorded a marginal growth of 0.9 per cent against a contraction of 2.5 per cent during the same period last year.

The gross credit of commercial bank expanded by 9.6 per cent in Fy22 up from 4.6 per cent in Fy21. In absolute terms, banks lent Rs 10.43 trillion in Fy22 up from Rs 5.39 trillion in Fy21.

Rating agency CRISIL in a separate report said Healthy economic activity and budgetary support from the government would lift the growth by 200-300 basis points to 11-12 per cent in the current fiscal (Fy23). “The biggest difference we expect this fiscal year is the upshift in the corporate credit growth trajectory. We see it doubling to 8-9 per cent”, said Krishnan Sitaraman, Deputy Chief Ratings Officer, CRISIL Ratings.

RBI data showed the infrastructure sector saw a good traction with growth scaling to 9.3 per cent in Fy22 from just 1.6 per cent in previous year. In absolute terms, banks gave Rs 1.01 trillion in loans for infrastructure in Fy22 as against mere Rs 17,787 crore in Fy21. The Union Budget pegs public capex outlay at around Rs 7.5 trillion in 2022-23. This is a significant increase over last fiscal with a sharp focus on public infrastructure.

The Credit growth to services sector accelerated to 8.9 per cent in March 2022 as compared to 3.0 per cent a year ago, mainly due to significant improvement in credit growth to companies and robust credit offtake in ‘trade’ and ‘transport operators’.

Personal loans segment continued to expand at a robust rate and grew by 12.4 per cent in March 2022 from 10.7 per cent in March 2021, RBI added.

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