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Last updated: 01 May, 2018  

Rupee.9.Thmb.jpg Bank credit

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Bikky Khosla | 01 May, 2018

There is a dire need to increase credit availability to the Indian industry, but the current scenario hardly offers much hope. Our public banks are saddled with mammoth non-performing assets, incidents of banking frauds are coming to light every next day, RBI is tightening the noose over the PSBs under its Prompt Corrective Action framework, and in such a situation lending to the corporate sector, particularly small and medium enterprises, is becoming increasingly difficult.

In an RTI reply, the central bank has recently revealed that total NPAs of Scheduled Commercial Banks stood at Rs 8.99 lakh crore as on December 31, 2017. Additionally, urban cooperative banks had NPAs worth Rs 21,297 crore on the same date. Needless to say, this is a mind boggling amount. According to a recent report by a rating agency, bank NPAs may further shoot up in the March quarter before beginning to gradually slide down thereafter, but still after that credit growth may not pick up due to ongoing frauds and allegations of banker-corporate nexus.

Now, let's have a look at a last week RBI report on Sectoral Deployment of Bank Credit for the month of March, 2018. It shows that in March, on a year-on-year basis, credit to non-food sector, agriculture and allied activities, industry and services sector increased by 8.4 percent, 3.8 percent, 0.7 percent and 13.8 percent, respectively. While these figures give a somewhat positive picture, a deeper look gives an opposite one, showing how sectors after sectors are still facing drop in deployment of bank credit.

The report shows a 15.5 percent drop in food credit, 2.7 percent fall in credit to the tourism, hotels & restaurants sector and a whopping 24.7 percent contraction in credit to shipping. Similarly, sectors like fertilizers (-8.6 percent), sugar (-11.5 percent), jute textiles (-4.6 percent), paper & paper products (-6.1 percent), petrochemicals (-23.7 percent), cement & cement products (-3.1 percent), basic metal & metal products (-1.2 percent) are still facing severe credit crunch. This situation demands prompt response.

I invite your opinions.

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Need of hour , make available low cost credit to MSME
Bhagawath Prasad | Tue May 22 16:32:19 2018
MSMSE s are deprived off two things , one is insufficient funds , second one is expensive funds , all of us aware of that MSMEs struggle with low margin sales as biggies have super structured mechanism to buy goods and services from these MSMSEs at lowest possible prices and highest possible credit period ( on books it may show something , but in reality 3% margins and that gets eroded in given credit terms) in this scenario governments suffocate them with high rate of interest with insufficient funding , so for the balance money they run to first NBFCs and private funding , this mechanism accounts to an average of 32% interest for poor MSME , can anyone imaging how an MSME can survive , this is how they come to a stage of selling own lands , houses , cars for repayments , many talks on farmers suicides , can anyone raise the issue of MSME suicides , no one is taking the same to government , I am sure government is aware of it but unfortunately half MSME population is nonvoters hence there is no great hearing for them.that's apart , , one must look at lowest possible credit to MSME s, remove NBFC mechanism and strengthen collateral free funding thru public sector , push forward NBFC to fund only capital equipment on lease.that will resolve half the problems of this poor sector.

Bank credit
SANDEEP GS | Thu May 3 14:48:17 2018

Swindling banks
Devendra Varma | Thu May 3 05:36:04 2018
All those who defraud massively on bank loans are destroying the economy and strangle its small sectors. They should be treated as traitors to the nation and dealt ith accordingly. Why don't the Indian legislators pass the appropriate deterrent laws to prevent pilferage of banks by insiders and outsiders?

Bank Credit
Narayan Avhale | Thu May 3 03:42:04 2018
I had last given my opinion whether it has been published or not, I am not aware of it. Basically the govt. bank has no specific responsibility & what ever may be the right to them, they are taking the undo advantage. Every section & every dept. whether govt. or co-operative have the same attitude. Hence need the strict action & then punishment. Even found corrupted for a single rs. must have at least 3 years custody & if the amount beyond one crore, shall have lifetime custody and for 10 crores & above shall have death punishment & no bail at all. All top 50 % officers & accountant are involved in this scam. Secondly talent must be recruited instead of any reservation because this create the suffocation, fed with non talented person being boss while working. This is why the person fed with various thought.

bank credit
ramakrisnan | Thu May 3 02:38:19 2018
sir read the news and i am sure there is a drop in financing and tightening there is a drop in sactioning bank credit .but it is good sighn to the msme.they will face this situation and they will change their business policies on immediate payment terms and there is no need for bank finance for them as they modify themselves to the situation and soon bank will keep their funds with them as there will not be any reqirements by the msme people.please see in the near future.If bank lends money they will get interest otherwise it will be a loss to them.

Bank Credit
Nitin | Wed May 2 21:48:17 2018
Indian industry has been using bank credit to run their business and extract profits. Now the industry will be forced to perform or perish. Many large business houses control companies with less than 10% equity in the company and 100% control over the company. This structure of the company holdings should stop along with the printing of currency to fund the public sector banks. The profits are being siphoned overseas. The difference between the currency in the country and the currency printed should give the total currency siphoned out of the country and saved in foreign accounts

Credit crunch
Raman Punjabi | Wed May 2 06:24:05 2018
Any honest individual person who is paying Income Tax and other taxes, not much left in their hand. Than how come they start any new business. Even any one start any new business, as per international n domestic market too much competition, it is difficult to survive in India. As Myself heard that everywhere they have to bribe to come up In the life. In short nothing is improve on the ground level. I. E. Myself still not receive my income tax refund which deducted as TDSsince more than 10years even personally visit IT office 2 Times and so many e-mails and phone calls to Concerned IT commissioner. I Don’t like to start any business in India. Myself is ex. NRI small business man.

Bank Credit
SJS RAVI | Wed May 2 02:02:53 2018
When in the best of times, Mudra or No Mudra, the banks never financed the Shudras of the Industry i.e. SMEs without more than sufficient liquid collateral i.e. FDs etc., How do we expect now when huge NPAs are almost sinking every PSB? Most political remedy will be more of steam emanating from the mouths of Gas Bags. Jumlas and more Jumlas. God Save India.

SANDEEP gopani | Tue May 1 15:32:13 2018
Yes, this is a very precarious situation for all senior banker to keep momentum of investment in industry by making available credit as and when required, as well as to work hard to keep check on increasing ONE.

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