Bankers said that with private investment practically coming to a halt, there was little demand for corporate credit. While activity may show an uptick in the second half, it will hardly compensate for the extended slowdown seen since the beginning of the year. Companies are battling stress and are deleveraging wherever possible. The retail segment is showing steady growth, but it is not in a position to make up for the slump in the industry segment.
Rating agency ICRA
in a report last week had said, with the Indian economy caught in a slowdown, bank credit
is expected to expand at a muted 6.5-7 per cent in 2019-20 (FY20) from 13.3 per cent in FY19.
This will be the lowest in 58 years, mainly on account of lower working capital requirements by companies and risk aversion among lenders. According to ICRA, even in a high-growth scenario, wherein the second half of FY20 sees the incremental bank credit
Rs 6.5-7 trillion, there will still be a 40-45 per cent year-on-year (YoY) decline.