February credit offtake lacklustre due to weakness in mid-corporate segment says Religare
Moneylife Digital Team 06 May 2013

While growth continues to be driven by large industries, trade services, NBFCs and retail, the mid-corporate segment is still exhibiting weak credit offtake, says Religare Capital Markets

February credit data released by the Reserve Bank of India (RBI) indicates that credit pick-up remained lacklustre during the month, growing at 1.2% month-on-month. On a year-on-year basis, growth stayed muted at 14.6%, down from 14.9% in January 2013 and 15.2% in February 2012. While growth continues to be driven by large industries, trade services, NBFCs (non-banking finance companies) and retail, the mid-corporate segment is still exhibiting weak credit offtake, says Religare Capital Markets.

 

As per data available till 22 February 2013, non-food credit growth was at 9.2% in 11MFY13 (up from 7.9% in 10MFY13; averaged 12%-13% during FY07-FY12). Year-on-year growth remained muted at 14.6% in February versus 14.9% in January.


Mid-corporate segment sees sharp dip month-on-month, SME picks up and large corporates steady. The mid-corporate segment continues to see lower credit deployment with outstanding advances to the segment shrinking 6.5% month-on-month. SME credit growth picked up by 2.9% month-on-month. Growth in the large corporate segment was ahead of overall credit growth at 18.7%. Despite moderating from 24.3% in FY12, this segment remains the key driver. 

 

Power and other infrastructure (ex-telecom) segments have been the primary drivers of credit growth, accounting for 43%/56% of the total incremental credit towards industries in the past 12 months/11MFY13. With strong growth year-to-date, the proportion of power sector loans has remained at elevated levels, contributing 19.1% of total industry advances in February’13 versus 16.7% in March’12.

 

Power/Road advances increased by 1.7%/1.9% Memorandum. Telecom sector exposure has remained flat month-on-month at Rs 920bn (-2% year-to-date). Overall infrastructure exposure remained flat at about 33.6% of industry credit.

 

Services loan growth picked up 2%. Within the services sector, growth continues to be driven by trade (up 33.8% year-) and NBFCs (up 16.6% year-on-year). The transport operators segment remains muted, with total outstanding credit flat at Rs 723bn after falling 8% in two months. Credit growth in commercial real estate dipped to 8.2% year-on-year. 

 

The unsecured loan portfolio also continues to grow at a healthy rate with credit card loans outstanding up 24% year-on-year.

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