‘Bank credit to grow at multi-decade low’

With economic activity being sharply impacted by COVID-19, bank credit growth will likely nosedive to a multi-decade low of 0-1% this fiscal, rating agency Crisil estimated. It had earlier estimated growth at 8-9% .

The forecast presumes a base case scenario of GDP contracting 5% in FY21.

“This crisis is unprecedented and so will its economic fallout be — such as lower capex demand as well as lower discretionary spends, to name some — which will slow down credit offtake significantly in the current fiscal,” said Krishnan Sitaraman, senior director, Crisil Ratings.

“The corporate loan portfolio, which constitutes almost half of total credit, is expected to be the worst-hit, and de-grow this fiscal. The lockdown has led to significant disruption in operations with limited capacity utilisation across sectors,” he added.