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Bank credit to non-banking finance companies (NBFCs) seems to be increasing by leaps and bounds. Credit growth to NBFCs at 46.4 per cent on a year-on-year basis in February 2011 was significantly higher than the growth of 19.8 per cent during the corresponding period of the previous year, according to Reserve Bank of India.
NBFCs operating in segments such as gold loans, commercial vehicles, and housing are tapping banks for credit in a big way to grow business. Hence, the spectacular growth in credit, said a banker.
“These NBFCs are specialised. They are efficient, grassroots players who know their customers very well. So, banks are giving credit to strong and creditworthy NBFCs. Instead of giving loans for financing 2,000 commercial vehicles, it is better to give a single cheque for Rs 200 crore to an NBFC for on-lending to transport operators,” said the banker.
Industry, services
Credit to industry grew by 26.5 per cent (y-o-y) in February 2011 as compared with an increase of 20.1 per cent in the previous year, led by infrastructure, metals, engineering, food processing, rubber, plastic and their products and cement and cement products, as per the RBI's data on sectoral deployment of bank credit.
Credit to the services sector grew by 24.2 per cent (y-o-y) in February 2011 as compared with 15.4 per cent in the previous year. Credit off-take by the commercial real estate sector at 17.8 per cent on a y-o-y basis in February 2011 was higher than the growth of 0.9 per cent during the corresponding period of the previous year.
Personal loans
On a y-o-y basis, personal loans grew by 16.2 per cent in February 2011 substantially higher than the growth of 4.1 per cent during the corresponding period of the previous year, with most of its components such as housing, advances against fixed deposits, vehicle loans and education exhibiting accelerated growth.
Credit to agriculture on a y-o-y basis, however, grew at a lower rate of 18.3 per cent in February 2011 as compared with 24.4 per cent in the previous year.
On a year-on-year (y-o-y) basis, non-food gross bank credit grew by 22.8 per cent in February 2011 as compared with 15.9 per cent in the corresponding period of last year.
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