While industrial credit contracted by 0.6 percent, and its share in overall credit declined to 30.8 per cent from 32.8 per cent a year ago, credit to household sector increased by 9 percent and its share in the total credit rose to 50.2 per cent from 48.7 per cent a year ago
Bank credit growth, on a year-on-year (y-o-y) basis, decelerated for the sixth successive quarter and stood at 5.7 percent in June, 2020, the RBI said on October 14 in its quarterly data release.
The moderation was across all bank groups, the data showed.
Of this, industrial credit contracted by 0.6 percent in June 2020, y-o-y, and its share in overall credit declined to 30.8 percent from 32.8 percent a year ago; credit to household sector, on the other hand, increased by 9 percent y-o-y, and its share in the total credit rose to 50.2 percent from 48.7 percent a year ago, the RBI said.
The weighted average lending rate (WALR) on outstanding credit declined by 25 basis points during the quarter ended June 2020 and by 55 basis points over the last one year, the RBI said.
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The RBI released its web publication entitled ‘Quarterly Basic Statistical Returns (BSR)-1: Outstanding Credit of Scheduled Commercial Banks (SCBs), June 2020’ on its Database on Indian Economy (DBIE) portal.
Total outstanding credit as on June stood at Rs 100 lakh crore as on June, 2020, of which PSBs accounted for about Rs 60 lakh crore, while private banks had an outstanding of Rs 35.5 lakh crore. Foreign banks had a share of Rs 4.1 lakh crore and small finance banks had a share of Rs 93,865 crore, showed the data.
Bank lending has come to a grinding halt on account of a sharp economic contraction in the wake of the COVID-19 pandemic. A slowing demand and high-risks of loan defaults have forced banks to be extra cautious in their lending decisions.
Rating agency CARE estimates that Indian banks are likely to restructure around 4-5 percent of the overall bank credit outstanding, while the Gross NPA (non-performing assets) ratio is likely to be 11-11.5 percent by the end of FY21.
The RBI has announced a one-time loan restructuring scheme for COVID-linked stressed assets. But, not every account will be eligible for one-time loan recast.
According to CARE, the additions to the GNPAs would primarily be from loans under SMA-1 (special mention category) and SMA-2 categories, which were under moratorium and not eligible for restructuring.
Also, banks may see stress coming from the lower-rated/stressed corporates and personal loans not eligible for the restructuring scheme and banking exposure to unsecured personal loans, the rating agency said.