Keeping pace with the economic recovery, credit to industry grew by 7.1% (year-on-year) in FY22. This against a decline of 0.4% in FY21, a year when the first wave of Covid devastated the economy.
The Reserve Bank of India (RBI), in a statement, said that in terms of size, credit to medium industries recorded a robust growth of 71.4% in March 2022, compared to 34.5% last year. . Growth in credit to micro and small industries accelerated from 3.9% to 21.5%. Loans to large industries recorded marginal growth of 0.9% against a contraction of 2.5% during the same period last year.
In absolute terms, bank credit to industry increased by Rs 2.09 trillion in FY22 compared to a contraction of over Rs 11,000 crore in FY21.
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. 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 has seen good traction with growth at scale
9.3% in FY22, compared to just 1.6% the year before.
In absolute terms, banks extended Rs 1.01 trillion in infrastructure loans in FY22 compared to only Rs 17,787 crore in FY21.
The Union budget sets government capital expenditure at around Rs 7.5 trillion for 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% a year ago. This is mainly due to a significant improvement in credit growth to finance companies and a robust drawdown of credit on “trade” and “transport operators”.