Tourism, commercial properties, transport and medium-sized firms — four sectors that together account for a fourth of
non-food credit — are showing the appetite for fresh funds, signalling likely demand
revival in pockets of an otherwise tepid economy.
An analysis of incremental
loans (year-to-date) in FY20 shows that loans to certain sectors rose even as the overall credit growth continues to be tepid. Loans to tourism, hotels and restaurants increased 16.4 per cent, compared with 6 per cent in the same period a year ago.
Loan growth to commercial real estate picked up at double the pace from last year at 12.3 per cent. Bank loans to the troubled NBFC sector is also picking up. It increased 15 per cent, up from 12.3 per cent a year ago. Vehicle loans have also started picking up after the government announced an outreach programme to push credit-offtake.
These increased 8.9 per cent.
Lenders are seeing some pick-up in the loans to medium sized firms at 0.4 per cent. A report by the State Bank of India research team shows that credit to medium and small enterprises touched a ten-month high in January at ₹38,700 crore. Besides, lending to micro-borrowers and receivables from credit card are also picking up; together, these account for close to one-fourth of the total non-food credit.
But loans to large industries continue to be in the negative zone. These contracted 2.4 per cent, compared to a growth of 1.9 per cent last year.
Overall credit growth is expected to be in the range of 6-7 per cent for FY20, according to various forecasts by rating agencies.
Credit growth to agriculture and allied activities decelerated to 6.5 per cent in January 2020 from 7.6 per cent in January 2019.
Credit growth to industry decelerated to 2.5 per cent in January 2020 from 5.2 per cent in January 2019. Within industry, credit growth to paper and paper products, rubber plastic and their products, and construction accelerated.