Credit growth falls below 17% first time in 2011

Non-food credit growth loans given by banks to companies and individuals slipped below the 17 per cent mark for the first time during 2011-12,despite it being the busy season.

According to RBI data,non-food credit grew at16.8 per cent year-on-year in the fortnight ended December 16,2011,the slowest pace seen so far in 2011-12. Banks lent Rs 30,500 crore during the fortnight,taking the outstanding bank credit to Rs 41,84,077 crore.

The sluggishness in credit growth might worry the central bank,which stated,in its Financial Stability Report released last week,that in view of prolonged and slow global recovery,the sustainability of growth of the domestic economy hinges on resuscitation of domestic demand,especially investment,for sustained growth.

Story continues below this ad

Non-food credit has risen just 8 per cent between March 25 and December 16,much slower than about 12 per cent increase seen in the corresponding period a year ago. Banks this year have given loans of about Rs 3,09,701 crore against Rs 3,81,046 crore during the same period last year.

However,credit growth in the previous year was higher on account disbursements of about Rs 60,000 crore to telecom companies to bid for 3G licences.

KR Kamath,CMD,Punjab National Bank said,We are not seeing new investments from corporates at the moment. But the industry could still achieve a credit growth of 18 per cent for the year as good growth is expected during January-March period as its the busy quarter.