Industry

‘Credit demand from priority sectors drops’

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Despite efforts by the government to boost credit supply by offering many a scheme to MSMEs and other priority sectors, the same has plunged to a low 1.9% in the June quarter from 10.2% a year ago, says a report.

To help small business tide over the impact of the pandemic, the government has offered credit-driven boost to the economy.

Quoting data from the Reserve Bank’s quarterly statistics on deposits and credit for the June quarter, Care Ratings on Tuesday said in absolute terms, overall bank deposits stood at ₹141.3 lakh crore in June 2020, up 11.5% from ₹126.7 lakh crore in June 2019. Outstanding credit stood at ₹103.3 lakh crore, up 6.4% but lower than 11.7% in the same period in June 2019. But on a sequential basis, credit growth has seen a negative 1.1% during the reporting period, which was also a negative 1% in the March 2020 quarter.

Overall contraction

Though overall contraction in credit demand has continued in the June quarter at minus 1.1% from minus 1% in June 2019, in absolute terms, incremental credit declined by a higher ₹1.2 lakh crore in June 2020 from ₹1 lakh crore in June 2019. This is owing to decline in overall sectoral growth — agriculture and allied credit declined by 0.4% incrementally, industrial credit by 1%, services sector declined by 2.6% growth and personal loan segment declined by 2.5% growth, says the report.

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Printable version | Oct 28, 2020 5:06:01 PM | https://www.thehindu.com/business/Industry/credit-demand-from-priority-sectors-drops/article32726191.ece

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