The Government and the Reserve Bank of India will need to pay urgent attention to the priority sector, especially the housing, agriculture and export segments, as well as medium enterprises as credit flow to these areas slowed considerably in FY13, say bankers.
Slowdown in credit flow to the above segments within the priority sector and to medium enterprises, among others, are the main reasons why banks were unable to achieve the Reserve Bank of India’s projection of 16 per cent growth in non-food bank credit in FY13.
On a year-on-year (y-o-y) basis, non-food bank credit increased by 14 per cent in March 2013, compared with the increase of 16.6 per cent in March 2012, according to RBI’s data on sectoral deployment of credit.
“Obviously, policy interventions are required to revive the flow of credit to key segments of the economy,” said a senior public sector bank.
Credit to agriculture increased by 8.1 per cent in March 2013, as compared with an increase of 13.3 per cent in March 2012. Credit to housing (under priority sector lending) nudged up just 0.6 per cent (against 10.6 per cent). Credit to exports rose 12 per cent (18.5 per cent).
Within the industry segment, loans to medium enterprises saw de-growth of 5.6 per cent (against a growth of 12.4 per cent). Credit to the micro and small enterprises and large industries grew by 20.6 per cent (12.2 per cent) and 16.7 per cent (22.4 per cent), respectively.
Personal loans — comprising consumer durables, housing (including priority sector), credit card outstanding and vehicle loans — held up relatively well, increasing by 14.5 per cent in March 2013, against an increase of 12.9 per cent in March 2012.