Bank credit to industry recovers in FY22, infra lending exceeds Rs 1 trn

Keeping pace with the economic recovery, bank credit to industry increased by 7.1% (year-on-year) in FY22, compared to a decline of 0.4% in FY21, when the first wave of the pandemic devastated the economy.

The Reserve Bank of India said in a statement that in terms of size, credit to medium industries recorded robust growth of 71.4% in March 2022, compared to 34.5% last year. Growth in credit to micro and small industries accelerated to 21.5% from 3.9% and credit to large industries recorded marginal growth of 0.9% from a contraction of 2.5% during the same period last year.

Gross credit from commercial banks increased by 9.6% in FY22 compared to 4.6% in FY21. In absolute terms, banks lent Rs 10.43 trillion during in FY22 from Rs 5.39 trillion in FY21.

Ratings agency CRISIL, in a separate report, said healthy economic activity and government fiscal support would boost bank credit growth by 200-300 basis points to 11-12% in the year. in progress (fiscal year 23). “The biggest difference we expect for this fiscal year is the rise in the corporate credit growth trajectory. We see it doubling to 8-9%,” said Krishnan Sitaraman, Deputy Head of Ratings, CRISIL Ratings.

RBI data showed that the infrastructure sector saw good traction with growth rising to 9.3% in FY22 from just 1.6% in the previous year. In absolute terms, banks extended Rs 1.01 trillion in infrastructure loans in FY22 compared to only Rs 17,787 crore in FY21. government capital expenditure at about Rs 7.5 trillion in 2022-23. This is a significant increase over last year with a particular focus on public infrastructure.

Credit growth to the services sector accelerated to 8.9% in March 2022, from 3.0% a year ago, mainly due to a significant improvement in credit growth to finance companies and a robust credit drawdown in ‘trade’ and ‘transport operators’.

The personal loan segment continued to grow at a healthy pace and grew by 12.4% in March 2022 from 10.7% in March 2021, RBI added.

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