MUMBAI: Even as bank non-food credit fell by ₹1.1 lakh crore in April, lending to non-banking finance companies (NBFCs) continued to grow. According to the Reserve Bank of India's sectoral deployment of credit data for April, loans to NBFCs grew by ₹5,000 crore to ₹8.12 lakh crore, compared to March as banks continued to lend to better-rated entities.
However, this is sharply lower than the growth seen in bank lending to NBFCs in March, which expanded by ₹1.15 lakh crore, the highest since January 2008.
The April data does not reflect the funds banks would have invested in the corporate bond papers of NBFCs under the Targeted Long-Term Repo Operations (TLTRO) window. RBI had made available three-year funding worth ₹1 lakh crore under the TLTRO 1.0 window. Separately, the central bank had also opened a separate TLTRO 2.0 window exclusively for those NBFCs and micro-finance companies with a lower rating, which were denied funding in the first round.
The drop in credit during April, which coincided with the first phase of the national lockdown and first half of lockdown 2.0, was however, driven by fall in lending to individuals under the personal loan segment by ₹63,000 crore and to micro and small enterprises by ₹23,000 crore. Within the personal loan segment, the sharpest drop was seen in borrowing through credit card outstanding and advances against fixed deposits by over 10%.
However, initial signs of consumer demand pick up is visible with bankers reporting loan applications and disbursals in areas where lockdown curbs have been eased.
“As India plans to enter into a planned exit in June, though continuing within the overall ambit of lockdown, available trends suggest that bank credit growth has shown signs of a very nascent pick up in the second fortnight of May. Most importantly, Bank Credit to NBFC sector continues to grow. We need to be vigilant and ensure that such trends pick up pace before the economy opens up," said Soumya Kanti Ghosh, group chief economic advisor at State Bank of India.
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