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Credit growth in the country is unlikely to revive “materially” in the near term as demand continues to act as a laggard, says a State Bank of India research report.
The report noted that it is “too early and premature” to say about credit growth picking up in the country.
In fiscal 2015-16, credit off-take showed some signs of improvement and was at 11.3 per cent as on March 18, 2016. However, as on April 29 this year, credit growth has again declined to 9.2 per cent.
“Given that demand is still a laggard we are sceptical of credit growth picking up even as banks are in the midst of balance sheet cleaning,” SBI said in a research note.
Growth cycle
According to the report, the supposed correlation between balance sheet cleaning and credit growth picking up will only happen once the growth cycle gathers significant momentum. “In our view growth will now have to happen before credit growth.”
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