Banks' credit growth falls to 17.8 pc in FY9

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SME Times News Bureau | 23 Aug, 2010
The economy witnessed banks' credit growth slowing down to 17.8 percent in 2008-09 as against 24.1 percent in the previous fiscal, a latest report by the Reserve Bank of India (RBI) has revealed.

According to the report, banks' total outstanding credit rose by 17.8 percent to Rs
28,47,713.12 crore during 2008-09, with over two-thirds of this loan amount accounted for by metropolitan areas.

The rate of growth in gross outstanding credit from scheduled commercial banks (SCBs) during the fiscal was, however, down by 6.3 percentage points from 24.1 percent in 2007-08, the RBI said in its report on 'Basic Statistical Returns of Scheduled Commercial Banks in India'.

"At the end of March, 2009, gross outstanding credit of scheduled commercial banks amounted to Rs 28,47,713 crore, registering an increase of 17.8 percent, as against an increase of 24.1 percent in the previous year," the 38th volume of the report said.

Though the RBI report was silent on the reasons for the slowdown in credit growth, experts said the global financial crisis had a ripple effect on the Indian economy during 2008-09.

The crisis deepened after US financial services icon Lehman Brothers collapsed in the middle of September, 2008, affecting economies around the world.

As per the report, metropolitan areas accounted for 67.3 percent of the total outstanding credit during the fiscal under review.

The outstanding amount of SCBs in metropolitan areas in 2008-09 was Rs 19,17,335.05 crore. The total number of credit accounts in these areas at the end of March 31, 2009, was 3.79 crore.

Urban areas, barring metropolitan cities, accounted for 16.1 percent or Rs 4,57,526.78 crore of the outstanding amount. The SCBs had a total of 1.44 crore accounts in urban areas.

Semi-rural communities had an outstanding amount of Rs 2,64,925.16 crore in 2008-09 from SCBs, or 9.3 percent of the total credit. These regions accounted for 2.45 crore accounts.

The rural hinterlands accounted for only 7.3 percent or Rs 2,07,926.13 crore. The total number of credit accounts in these regions as of March 31, 2009, stood at 3.33 crore.