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Non-food credit, comprising loans given by banks to agriculture and allied activities, industry, services and personal segments, grew at a slower clip of 3.5 per cent year-on-year in January 2017 as against 9.8 per cent in the year-ago period, according to Reserve Bank of India data.
The slow growth in non-food credit shows that demand in the economy has not recovered after taking a beating during the 50-day demonetisation period between November 9 and December 30, 2016. This is despite banks cutting lending rates on the back of copious deposit inflows during the demonetisation period.
Credit to agriculture and allied activities increased at a slower pace of 8.1 per cent in January 2017, compared with a robust increase of 13.4 per cent in January 2016.
Credit to industry contracted 5.1 per cent in January 2017 in contrast with an increase of 5.6 per cent in January 2016.
According to the RBI, credit growth to major sub-sectors such as infrastructure, food processing, basic metal and metal products and textiles witnessed deceleration/contraction.
Credit to the services sector increased 8.1 per cent in January 2017, compared with an increase of 8.9 per cent in January 2016.
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