bank credit: Bank loans rise across sectors in April

Loan demand in April picked up at more than double the pace of last year at 11.3 percent compared to 4.7 percent last April as economic activity accelerated across sectors.

Loan demand from large companies turned positive, as they are shifting back to banks to meet their funding needs as market rates surge.

Credit to large companies rose 1.6% in April from the same month a year earlier, when it had contracted 3.6%, according to the latest data on sectoral flow of bank credit released by the Reserve

, Credit to medium industries increased 53.5% year-on-year in April this year compared with 44.8% last year. The growth in credit to micro and small industries was 29% against 8.7% a year earlier. Overall, credit to industry expanded 8.1% against a contraction of 0.4% in April 2021.

“The Reserve Bank’s continuous efforts to maintain adequate liquidity in the banking system, coupled with the government’s efforts to boost credit demand conditions in the economy, was reflected in the pickup in credit offtake by various sectors,” RBI’s latest annual report said.

Retail loans too rose faster this year at 14.7% against 12.1% in April 2021, primarily driven by ‘housing’ and ‘vehicle loans’ segments.

Credit growth to agriculture and allied activities continued to be robust at 10.6%; a year earlier, it was 10.7%. Bank credit growth remained robust for the resilient agriculture sector even during the Covid-19 pandemic, with continued support of the government’s interest subvention scheme, the central bank said.

Loans to the services sector picked up 11.1% in April this year compared with 2.4% a year earlier, mainly due to demand from NBFCs, trade, tourism, hotels & restaurants and transport operators. The services sector, which felt the brunt of the pandemic, is staging a broad-based recovery from the second quarter of fiscal 2022, the RBI said.

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