Driven by MSMEs, banks’ incremental credit growth reaches 10.6%: SBI Research

Banks’ incremental credit growth, which so far this fiscal year has touched 10.6 per cent, is primarily boosted by the advances to the micro and small enterprises (MSME), a report said.
In the April-January period, banks’ incremental credit has increased by Rs 3.29 trillion, which is the highest in the last four years, as against Rs 1.4 trillion a year ago.
Deposits increased by Rs 2.2 trillion from Rs 11. 2 trillion, driven by the demonetisation.
The overall credit offtake in 2017-18 was maximum during November and December 2017, when it touched Rs 2.1 trillion, which was 64 per cent of the total April-January credit offtake of Rs 3.2 trillion.
“If we look the month-on-month incremental growth in November and December, this indicate a significant jump in credit to MSMEs,” SBI Research said in a report on Wednesday.
There is also an increased credit growth for the auto loan segment, coinciding with a robust growth of the commercial vehicle segment, it said.
Till 15 September, 2017, the incremental credit growth was negative at Rs 60,000 crore, as compared to last year’s growth of Rs 33,000 crore.
A decline in credit offtake in October 2017 pushed the credit growth downward but aftermath that the growth momentum has picked up.
The report said although the banking system has remained resilient, asset quality of the banks remain under pressure.
“Banks have been tackling this problem aggressively and the resolution rate will pick up more pace as expectations of sellers of assets become more realistic and valuations given by buyers also are better, sensing an imminent recovery,” the report said.
It is too early to estimate the numbers for 2018-19, as government has taken a number of initiatives to create strong banks. “We believe credit growth will be higher than the last three to four year’s growth,” it added.