Small BusinessGovt banks struggle, but private banks'credit growth picks up
After losing customer accounts to public sector banks at the height of the downturn, private sector banks seem to be on their way back.
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While public sector and foreign banks’ credit growth is still slowing down, private sector banks have seen a rise, according to data released by the Reserve Bank of India (RBI) in its Macroeconomic and Monetary Developments Third Quarter Review.
The pace of credit growth for private sector banks increased to 9.8 per cent for 12 months up to January 15, compared to 8.9 per cent a year earlier. From January 16, 2009, to January 15, 2010, private banks extended additional loans worth Rs 47,940 crore, compared to Rs 40,045 crore in the previous 12 months.
Foreign banks continued to squeeze their loan books. From January 16, 2009, to January 15, 2010, they pared their loan assets by 9.7 per cent, as against 13.4 per cent growth in the previous 12 months. Total outstanding loans of foreign banks fell Rs 16,720 crore to Rs 1,55,532 crore in the 12 months up to January 15, 2010.
Public sector banks saw their credit growth slow to 16.8 per cent for 12 months up to January 15, 2010, compared to 27 per cent a year earlier.
From January 16, 2009, to January 15, 2010, they disbursed Rs 322,500 crore loans, compared to Rs 408,390 crore in the previous 12 months.
Most public sector banks have almost given up any hope of meeting the 20 per cent credit growth target they had set at the start of the financial year. State Bank of India (SBI) and Union Bank had a target of 25 per cent credit growth: SBI is willing to settle for up to 18 per cent credit growth by March-end, while Union Bank Chairman and Managing Director MV Nair said overall bank credit was expected to grow 15 per cent.
BOUNCING BACK
Credit flow from scheduled commercial banks (Rs cr)
Banks
Outstanding as on
Jan. 15, 2010
As on Jan. 16, ‘09
As on Jan. 15, ‘10
Amount
%
Amount
%
Public sector
2,241,219
408,390
27.00
322,500
16.80
Foreign
155,532
20,374
13.40
-16,720
-9.70
Private
537,025
40,045
8.90
47,940
9.80
All scheduled
commercial*
3,008,909
476,514
22.00
366,832
13.90
* Including Regional Rural Banks Source:RBI
RBI had, during the course of the year, revised the 20 per cent target for credit growth to 18 per cent.