Loans to Large Cos Grow in Oct After 14 Months of Decline

Private sector capex appears to be in a revival mode. After 14 months of contraction, loan growth to large corporates turned positive in October, although borrowing by medium-sized firms and retail still continue to drive loan books and lenders.

Loans to large corporations rose 0.5%year-on-year to Rs 22.7 lakh crore in October compared with a contraction of 1.8% a year ago. All major segments except services_ including agriculture, industry and retail – posted higher growth rates. Overall bank credit rose6.9% in October compared to 5.2% a year ago, according to the latest date on sectoral deployment of bank credit.

What is encouraging to see is a 10.7% growth in gross capital formation in Q2FY22, driven primarily by public capital expenditure although there are also signs of a pickup in private capex in the current fiscal,” said Usman Chaudhry, chief analytics officer, adulterating’s.

Credit growth to industry including small and medium-sized firms picked up to 4.1% in October 2021 from a contraction of 0.7% in October 2020. Size –wise, credit to medium industries rose 48.6% in October 2021 as compared to 20.8% last year. Credit to micro and small industries accelerated to 11.9% in October 2021 from0.7% a year ago. Retail loans rose in October 2021 via-a-vis 8.7% in October 2020 primarily due to ‘housing’ ,  ‘vehicle loans’ and ‘ loans against gold Jewellery’ RBI data indicated.

Credit to agriculture and allied activities registered an accelerated growth of 10.2% in October 2021 as compared to 7.2% in October 2020.

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