Bank credit growth is likely to remain moderate in the near term as lenders will continue to remain risk-averse due to the pandemic-led uncertainty, according to a report.
The overall bank credit growth in October continued to decelerate to 5.6%. “The overall credit growth is expected to remain slower in the near term as banks are being selective in giving fresh loans due to asset quality concerns,” Care Ratings wrote in a report.
It said though the interest rates of scheduled commercial banks (SCBs) were falling (by 115 bps from October 2019 to October 2020), pick up in incremental credit had not been seen.
Services, retail and agriculture and allied segments grew 9.5%, 9.3% and 7.4% respectively in October. Industrial segment registered a contraction of 1.7% during the same period, compared with a growth of 3.4% in October 2019.