­
Banks not lending enough to industry | PT's IAS Academy
HomeUPSC Mains GS IIIPrelimsIndian EconomyLatest Current AffairsGovernance and Institutions

Banks not lending enough to industry

SHARE:

The bank lending statistics show the persistent slowdown in private investment in the economy.

SHARE:

 Banks not lending enough to industry

Read more on - Polity | Economy | Schemes | S&T | Environment

  • The story: The share of industrial credit in banks loans, after years of sluggish growth, declined to a record low of 26 per cent during the first five months of FY22, down from 26.6 per cent during FY21. This indicates the lack of investment interest from private industry. At its peak in FY13, industrial credit accounted for nearly 46 per cent of loan disbursements.
  • So what's growing: In comparison, personal loans, including home loans, accounted for 26.7 per cent of bank credit during the first five months of FY22, up from 26.1 per cent at the end of March this year and a low of 18.2 per cent in FY12.
  1. Personal loans, including housing, now at 26.7% of bank credit, highest ever; Industry's share in bank loans at 26%, lowest ever
  2. The Reserve Bank of India has started providing sectoral deployment of bank credit that personal loans have overtaken industrial credit.
  • Details: Outstanding industrial credit was up just 2.3 per cent year-on-year during the first five months of FY22 to Rs 28.2 trillion at the end of August. In comparison, the disbursement in personal loans by banks was up 12.1 per cent YoY during the first five months of FY22 to reach 28.94 trillion at the end of the same month. This hints at a continued slowdown in private sector investment and capex in the industry.
  1. Consumer demand continues to drive economic recovery while companies continue to deleverage their balance sheets rather than invest in new projects or capacity expansion
  2. Corporate capex (capital expenditure) may take off in the second half of FY23 or early FY24 once a sustained rise in consumer demand results in higher capacity utilisation.
  • A steady fall: The bank credit data confirms what is seen in the gross domestic product (GDP) data. The share of investment in India’s GDP declined to a multi-year low in 2020-21 year as companies remain reluctant to invest. The share of investment, or gross fixed capital formation, declined to a 17-year low of 27.1 per cent of India’s GDP in FY21, down from 29 per cent a year ago and an all-time high of nearly 39 per cent in FY10, according to the data from National Statistical Organisation (NSO). Sluggish growth in banks’ credit to industry also shows in the bond market.
  1. Very few companies in the manufacturing or the industrial segments are borrowing from the corporate bond market and most of the bond issuances are either from non-banking finance companies or public sector firms such as NTPC
  2. In all, banks disbursed fresh industrial loans worth Rs 62,000 crore in the April-August 2021 period while their retail book was up Rs 3.13 trillion during the period.
  3. If the growth trend in the first five months of FY22 persists during the rest of the fiscal year, FY22 would be the eighth year in a row when retail credit or personal loans have grown at a faster pace than industrial credit.
  • Rate of growth: Industrial credit grew at a compound annual growth rate (CAGR) of just 2 per cent in the last seven years, growing from Rs 25.2 trillion at the end of March 2014 to Rs 28.96 trillion at the end of March 2021. In comparison, banks’ retail book grew at a CAGR of 16 per cent during the period, from Rs 13.4 trillion at the end of March 2014 to Rs 28.5 trillion at the end of March 2021. Non-food credit grew at a CAGR of 10.2 per cent during the period, from Rs 55.3 trillion to Rs 108.9 trillion at the end of March 2021.
  • Summary: Tonnes of money is flowing into Indian startups, via the private equity route. That is equity, and not debt (or credit). Banks are not involved in that credit creation process, as most of those startups are loss-making. It is when Indian banking system will again start lending to industry in a big way, that a sustained structural recovery will seem visible.
  • EXAM QUESTIONS: (1) What are the various components of bank credit in India? List and explain. (2) Why are industries not taking fresh loans for new projects? Explain.
Read more on - Polity | Economy | Schemes | S&T | Environment

#bankcredit #PSBs #NSO #retailcredit #industrialcredit




* Content sourced from free internet sources (publications, PIB site, international sites, etc.). Take your own subscriptions. Copyrights acknowledged.
Name

01-01-2020,1,04-08-2021,1,05-08-2021,1,06-08-2021,1,28-06-2021,1,Abrahamic religions,6,Afganistan,1,Afghanistan,35,Afghanitan,1,Afghansitan,1,Africa,2,Agri tech,2,Agriculture,150,Ancient and Medieval History,51,Ancient History,4,Ancient sciences,1,April 2020,25,April 2021,22,Architecture and Literature of India,11,Armed forces,1,Art Culture and Literature,1,Art Culture Entertainment,2,Art Culture Languages,3,Art Culture Literature,10,Art Literature Entertainment,1,Artforms and Artists,1,Article 370,1,Arts,11,Athletes and Sportspersons,2,August 2020,24,August 2021,239,August-2021,3,Authorities and Commissions,4,Aviation,3,Awards and Honours,26,Awards and HonoursHuman Rights,1,Banking,1,Banking credit finance,13,Banking-credit-finance,19,Basic of Comprehension,2,Best Editorials,4,Biodiversity,46,Biotechnology,47,Biotechology,1,Centre State relations,19,CentreState relations,1,China,81,Citizenship and immigration,24,Civils Tapasya - English,92,Climage Change,3,Climate and weather,44,Climate change,60,Climate Chantge,1,Colonialism and imperialism,3,Commission and Authorities,1,Commissions and Authorities,27,Constitution and Law,467,Constitution and laws,1,Constitutional and statutory roles,19,Constitutional issues,128,Constitutonal Issues,1,Cooperative,1,Cooperative Federalism,10,Coronavirus variants,7,Corporates,3,Corporates Infrastructure,1,Corporations,1,Corruption and transparency,16,Costitutional issues,1,Covid,104,Covid Pandemic,1,COVID VIRUS NEW STRAIN DEC 2020,1,Crimes against women,15,Crops,10,Cryptocurrencies,2,Cryptocurrency,7,Crytocurrency,1,Currencies,5,Daily Current Affairs,453,Daily MCQ,32,Daily MCQ Practice,573,Daily MCQ Practice - 01-01-2022,1,Daily MCQ Practice - 17-03-2020,1,DCA-CS,286,December 2020,26,Decision Making,2,Defence and Militar,2,Defence and Military,281,Defence forces,9,Demography and Prosperity,36,Demonetisation,2,Destitution and poverty,7,Discoveries and Inventions,8,Discovery and Inventions,1,Disoveries and Inventions,1,Eastern religions,2,Economic & Social Development,2,Economic Bodies,1,Economic treaties,5,Ecosystems,3,Education,119,Education and employment,5,Educational institutions,3,Elections,37,Elections in India,16,Energy,134,Energy laws,3,English Comprehension,3,Entertainment Games and Sport,1,Entertainment Games and Sports,33,Entertainment Games and Sports – Athletes and sportspersons,1,Entrepreneurship and startups,1,Entrepreneurships and startups,1,Enviroment and Ecology,2,Environment and Ecology,228,Environment destruction,1,Environment Ecology and Climage Change,1,Environment Ecology and Climate Change,458,Environment Ecology Climate Change,5,Environment protection,12,Environmental protection,1,Essay paper,643,Ethics and Values,26,EU,27,Europe,1,Europeans in India and important personalities,6,Evolution,4,Facts and Charts,4,Facts and numbers,1,Features of Indian economy,31,February 2020,25,February 2021,23,Federalism,2,Flora and fauna,6,Foreign affairs,507,Foreign exchange,9,Formal and informal economy,13,Fossil fuels,14,Fundamentals of the Indian Economy,10,Games SportsEntertainment,1,GDP GNP PPP etc,12,GDP-GNP PPP etc,1,GDP-GNP-PPP etc,20,Gender inequality,9,Geography,10,Geography and Geology,2,Global trade,22,Global treaties,2,Global warming,146,Goverment decisions,4,Governance and Institution,2,Governance and Institutions,773,Governance and Schemes,221,Governane and Institutions,1,Government decisions,226,Government Finances,2,Government Politics,1,Government schemes,358,GS I,93,GS II,66,GS III,38,GS IV,23,GST,8,Habitat destruction,5,Headlines,22,Health and medicine,1,Health and medicine,56,Healtha and Medicine,1,Healthcare,1,Healthcare and Medicine,98,Higher education,12,Hindu individual editorials,54,Hinduism,9,History,216,Honours and Awards,1,Human rights,249,IMF-WB-WTO-WHO-UNSC etc,2,Immigration,6,Immigration and citizenship,1,Important Concepts,68,Important Concepts.UPSC Mains GS III,3,Important Dates,1,Important Days,35,Important exam concepts,11,Inda,1,India,29,India Agriculture and related issues,1,India Economy,1,India's Constitution,14,India's independence struggle,19,India's international relations,4,India’s international relations,7,Indian Agriculture and related issues,9,Indian and world media,5,Indian Economy,1248,Indian Economy – Banking credit finance,1,Indian Economy – Corporates,1,Indian Economy.GDP-GNP-PPP etc,1,Indian Geography,1,Indian history,33,Indian judiciary,119,Indian Politcs,1,Indian Politics,637,Indian Politics – Post-independence India,1,Indian Polity,1,Indian Polity and Governance,2,Indian Society,1,Indias,1,Indias international affairs,1,Indias international relations,30,Indices and Statistics,98,Indices and Statstics,1,Industries and services,32,Industry and services,1,Inequalities,2,Inequality,103,Inflation,33,Infra projects and financing,6,Infrastructure,252,Infrastruture,1,Institutions,1,Institutions and bodies,267,Institutions and bodies Panchayati Raj,1,Institutionsandbodies,1,Instiutions and Bodies,1,Intelligence and security,1,International Institutions,10,international relations,2,Internet,11,Inventions and discoveries,10,Irrigation Agriculture Crops,1,Issues on Environmental Ecology,3,IT and Computers,23,Italy,1,January 2020,26,January 2021,25,July 2020,5,July 2021,207,June,1,June 2020,45,June 2021,369,June-2021,1,Juridprudence,2,Jurisprudence,91,Jurisprudence Governance and Institutions,1,Land reforms and productivity,15,Latest Current Affairs,1136,Law and order,45,Legislature,1,Logical Reasoning,9,Major events in World History,16,March 2020,24,March 2021,23,Markets,182,Maths Theory Booklet,14,May 2020,24,May 2021,25,Meetings and Summits,27,Mercantilism,1,Military and defence alliances,5,Military technology,8,Miscellaneous,454,Modern History,15,Modern historym,1,Modern technologies,42,Monetary and financial policies,20,monsoon and climate change,1,Myanmar,1,Nanotechnology,2,Nationalism and protectionism,17,Natural disasters,13,New Laws and amendments,57,News media,3,November 2020,22,Nuclear technology,11,Nuclear techology,1,Nuclear weapons,10,October 2020,24,Oil economies,1,Organisations and treaties,1,Organizations and treaties,2,Pakistan,2,Panchayati Raj,1,Pandemic,137,Parks reserves sanctuaries,1,Parliament and Assemblies,18,People and Persoalities,1,People and Persoanalities,2,People and Personalites,1,People and Personalities,189,Personalities,46,Persons and achievements,1,Pillars of science,1,Planning and management,1,Political bodies,2,Political parties and leaders,26,Political philosophies,23,Political treaties,3,Polity,485,Pollution,62,Post independence India,21,Post-Governance in India,17,post-Independence India,46,Post-independent India,1,Poverty,46,Poverty and hunger,1,Prelims,2054,Prelims CSAT,30,Prelims GS I,7,Prelims Paper I,189,Primary and middle education,10,Private bodies,1,Products and innovations,7,Professional sports,1,Protectionism and Nationalism,26,Racism,1,Rainfall,1,Rainfall and Monsoon,5,RBI,73,Reformers,3,Regional conflicts,1,Regional Conflicts,79,Regional Economy,16,Regional leaders,43,Regional leaders.UPSC Mains GS II,1,Regional Politics,149,Regional Politics – Regional leaders,1,Regionalism and nationalism,1,Regulator bodies,1,Regulatory bodies,63,Religion,44,Religion – Hinduism,1,Renewable energy,4,Reports,102,Reports and Rankings,119,Reservations and affirmative,1,Reservations and affirmative action,42,Revolutionaries,1,Rights and duties,12,Roads and Railways,5,Russia,3,schemes,1,Science and Techmology,1,Science and Technlogy,1,Science and Technology,819,Science and Tehcnology,1,Sciene and Technology,1,Scientists and thinkers,1,Separatism and insurgencies,2,September 2020,26,September 2021,444,SociaI Issues,1,Social Issue,2,Social issues,1308,Social media,3,South Asia,10,Space technology,70,Startups and entrepreneurship,1,Statistics,7,Study material,280,Super powers,7,Super-powers,24,TAP 2020-21 Sessions,3,Taxation,39,Taxation and revenues,23,Technology and environmental issues in India,16,Telecom,3,Terroris,1,Terrorism,103,Terrorist organisations and leaders,1,Terrorist acts,10,Terrorist acts and leaders,1,Terrorist organisations and leaders,14,Terrorist organizations and leaders,1,The Hindu editorials analysis,58,Tournaments,1,Tournaments and competitions,5,Trade barriers,3,Trade blocs,2,Treaties and Alliances,1,Treaties and Protocols,43,Trivia and Miscalleneous,1,Trivia and miscellaneous,43,UK,1,UN,114,Union budget,20,United Nations,6,UPSC Mains GS I,584,UPSC Mains GS II,3969,UPSC Mains GS III,3071,UPSC Mains GS IV,191,US,63,USA,3,Warfare,20,World and Indian Geography,24,World Economy,404,World figures,39,World Geography,23,World History,21,World Poilitics,1,World Politics,612,World Politics.UPSC Mains GS II,1,WTO,1,WTO and regional pacts,4,अंतर्राष्ट्रीय संस्थाएं,10,गणित सिद्धान्त पुस्तिका,13,तार्किक कौशल,10,निर्णय क्षमता,2,नैतिकता और मौलिकता,24,प्रौद्योगिकी पर्यावरण मुद्दे,15,बोधगम्यता के मूल तत्व,2,भारत का प्राचीन एवं मध्यकालीन इतिहास,47,भारत का स्वतंत्रता संघर्ष,19,भारत में कला वास्तुकला एवं साहित्य,11,भारत में शासन,18,भारतीय कृषि एवं संबंधित मुद्दें,10,भारतीय संविधान,14,महत्वपूर्ण हस्तियां,6,यूपीएससी मुख्य परीक्षा,91,यूपीएससी मुख्य परीक्षा जीएस,117,यूरोपीय,6,विश्व इतिहास की मुख्य घटनाएं,16,विश्व एवं भारतीय भूगोल,24,स्टडी मटेरियल,266,स्वतंत्रता-पश्चात् भारत,15,
ltr
item
PT's IAS Academy: Banks not lending enough to industry
Banks not lending enough to industry
The bank lending statistics show the persistent slowdown in private investment in the economy.
https://blogger.googleusercontent.com/img/a/AVvXsEjUZW62kuBTB8vgIVwirYZziLgxC09dEjU0Q_dOymLI-qxAO7Z8Jl3xvOk-CbuPY6wS_OZqsHSjfpqeuaKJUI4WN8W6OJRnpd2PiGApIZuPQksTO_TUXKVsFtUvyRIqLwXSZCQ1DIuT4qwtG9o4BV6d7hXIn0sXWvzJN0ge7NgLS2haPswDzqQOrz7Uvg=s16000
https://blogger.googleusercontent.com/img/a/AVvXsEjUZW62kuBTB8vgIVwirYZziLgxC09dEjU0Q_dOymLI-qxAO7Z8Jl3xvOk-CbuPY6wS_OZqsHSjfpqeuaKJUI4WN8W6OJRnpd2PiGApIZuPQksTO_TUXKVsFtUvyRIqLwXSZCQ1DIuT4qwtG9o4BV6d7hXIn0sXWvzJN0ge7NgLS2haPswDzqQOrz7Uvg=s72-c
PT's IAS Academy
https://civils.pteducation.com/2021/10/Banks-not-lending-enough-to-industry-Prelims-UPSCMainsGSIII-Essaypaper-IndianEconomy-Markets-Covid-Pandemic-RBI-GovernanceandInstitutions-Institutionsandbodies.html
https://civils.pteducation.com/
https://civils.pteducation.com/
https://civils.pteducation.com/2021/10/Banks-not-lending-enough-to-industry-Prelims-UPSCMainsGSIII-Essaypaper-IndianEconomy-Markets-Covid-Pandemic-RBI-GovernanceandInstitutions-Institutionsandbodies.html
true
8166813609053539671
UTF-8
Loaded All Posts Not found any posts VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES POSTS View All RECOMMENDED FOR YOU LABEL ARCHIVE SEARCH ALL POSTS Not found any post match with your request Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow TO READ FULL BODHI... Please share to unlock Copy All Code Select All Code All codes were copied to your clipboard Can not copy the codes / texts, please press [CTRL]+[C] (or CMD+C with Mac) to copy