Growing credit demand in Q3 indicates revival of pvt capex cycle, says report
   Date :13-Jan-2022

Growing credit
Business Bureau :
CREDIT growth, which has been lagging deposits for years, has turned buoyant in the third quarter of this fiscal by a wide margin at Rs 3.5 lakh crore as against a steep Rs 2.2 lakh crore decline in deposits, indicating that corporates’ plans of capacity expansion across sectors, a report said. Credit growth across banks, which had considerably weakened since FY20, has picked up significantly and was at 7.3 per cent to the week to December 17, 2021 -- a tad lower than pre-pandemic level of 7.5 per cent in December 2019. On the other hand, deposits which was consistently in double-digits since the beginning of the pandemic and was at 12.3 per cent in March 2021 have decelerated to 9.5 per cent in December 2021 -- lower than the pre-pandemic level of 10 per cent, according to SBI Research on Wednesday.
The Q3 of FY22 has seen a visible expansion in credit growth across sectors with incremental CD (credit-deposit) ratio at 133 in Q3 as against only 2 in H1. Incremental deposits declined by Rs 2.2 lakh crore during this time while net credit sales rose by Rs 3.5 lakh crore, said Soumya Kanti Ghosh, Group Chief Economic Adviser at the State Bank of India. Accordingly, gross bank credit grew from Rs 1,04,349 crore in November 2020 to Rs 1,09,516 crore in March 2021, and further to Rs 1,08,975 crore in August 2021, rising again to Rs 1,11,622 crore in November 2021. Of this the share of industries stood at Rs 27,602 crore, Rs 28,958 crore, Rs 28,196 crore and Rs 28,654 crore, respectively during this period, the report said. Sectoral credit numbers also reflect better disbursements since September 2021.
Growth in gross bank credit till August 2021, which was in negative by Rs 54,100 crore, was in the green with an incremental Rs 2,10,700 crore in November 2021—an incremental growth of Rs 2,64,800 crore between September and November 2021--, thanks to uptick in credit to industries rose by Rs 45,800 crore, compared to net outflow of Rs 76,200 crore during April-August 2021.