Within industry, credit growth accelerated in beverage & tobacco, mining & quarrying, petroleum, coal product & nuclear fuels, cement & cement products and vehicles, vehicle parts & transport equipment. However, credit growth contracted in chemical & chemical products, all engineering, glass & glassware, gems & jewellery and infrastructure decelerated.
The deceleration was also witnessed in the services sector, which saw a sharp contraction to 8.5 per cent in March 2020 from 17.8 per cent a year ago. Growth in personal loans decelerated marginally to 15.7 per cent in March 2020 vis-à-vis 16.4 per cent in the same period last year.
However, after analyzing the same set of data, State Bank of India’s group chief economic advisor Soumya Kanti Ghosh noted that the sectoral credit growth data released by RBI reveals a significant jump in credit growth in the month of March, with growth the highest since the publication of RBI sectoral credit data.
“This in turn implies the increase in working capital limit by banks for companies and also in the last two fortnights, credit increased by Rs 97,910 crore. We we believe that banks have extended a substantial amount of credit in the last 7-days of the year ended March 2020 that includes both term loan and working capital loan with companies bracing to tide over the Covid-19 crisis.”
Ghosh noted that the credit to NBFC sector in March expanded by a steep Rs 1.15 trillion, the highest since January 2008.
“Even retail credit did not perform too badly, with March incremental growth, still higher than February even as the economic activity was nearly at a complete halt in the second fortnight of March."
“Incremental credit to Industry in March at Rs 1.34 lakh crores was also at 147 month high at a with credit to MSME at 24 month high and Infrastructure registering a 12 month high,” Ghosh said.