The State Bank of India has released a report of its assessment of the state of bank assets. The fortnightly data of all scheduled commercial banks (ASCB) indicate that the trend in bank credit has reversed for the fortnight ended 13 September, from the earlier fortnight, with credit expanding by Rs 20,998 crore.
A sectoral analysis indicates that credit to Industry continues to decelerate (degrowth of Rs. 1.2 lakh crores), with credit to services and retail is still holding up, the report says. In particular, credit to non-banking financial companies (NBFC) from banks has expanded by Rs 39,200 crores in the current fiscal as against degrowth last year. Clearly, “this indicates that the news of credit freeze to the NBFC sector is untrue”, the report of the Economic Research Department of the SBI says.
Interestingly, among the personal loans segments that have seen slower disbursements are consumer durables for which credit contracted by 72.5% year-on-year till July. “Some analysts had earlier interpreted interpret this as an indicator of continued distress in this sector. We believe there is no decline in credit to consumer durables but the nomenclature has been changed and most of the loans may have shifted to other personal loans,” says the report.
In terms of numbers, other personal loans have expanded by Rs 1.24 lakh crore during this period while loans to consumer durables have declined by Rs 14,900 crore. “So,” the report says, “there is a net increase of around Rs 1.1 lakh crore.”
Meanwhile, the fiscal deficit numbers showed a moderation in August, buoyed by a sharp jump in non-tax revenue, bolstered by RBI dividends. The monthly figures indicate that although revenue expenditure increased to Rs 1.99 lakh crore in August as compared to Rs 1.80 lakh crore in July, the capital expenditure declined in August to Rs 28,571 crore as compared to Rs 44,605 crore in July. This indicates, the assessment reads, “frontloading of expenditure is yet to pick pace.”
“The good thing is that,” says the report, “We now believe the government will stick to the fiscal deficit for FY20 AT 3.3%, given the aggressive disinvestment plans and RBI interim dividends.”