The bank credit growth across sectors saw a significant surge in March, even as the economic activity was halted in the second fortnight of the month, a report said.
The credit to NBFC sector increased sharply by Rs 1.15 lakh crore, the highest reported since January 2008, said the SBI Research’s Ecowrap. Besides, the incremental growth in March incremental in retail credit is reported at 0.36 lakh crore, higher than in February.
Likewise, the incremental credit to industry was reported at Rs 1.34 lakh crore, also a 147-month high. The credit to MSMEs was at a 24-month high of 0.67 lakh crore while infrastructure registered a 12-month high growth at around 0.46 lakh crore, said the report. India has been under a nationwide lockdown due to COVID-19 since March 25. The lockdown is now extended till May 17.
“The increase in working capital limit by banks for companies and also in the last two fortnights, credit increased by Rs 97,910 crore. We believe that banks have extended a substantial amount of credit in the last 7-days of the year ended March 2020 that includes both term loan and working capital loan with companies bracing to tide over the Covid-19 crisis.” the report noted.
The report also said that the credit growth contracted by Rs 31,562 crore in the first fortnight of March of the current financial year, implying the customers are using the limits during these uncertain times. “During FY20, the Credit offtake was muted with a growth at 6.1% being less than half the growth of 13.3% in 2018-19, due to low momentum and unfavorable base effects. While, aggregate deposits increased by 7.9% in FY20, compared to 7.8% growth in FY19”, it said.