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Business revival has been continuing well into the current financial year as signalled by the growth in corporate credit in the first quarter.
Data from major banks indicate that there has been a sustained growth in business loans. This assumes significance as loans to industries and businesses had been stalled due to macro-economic concerns and rising non-performing assets (NPAs).
“From what appeared like green shoots last year, we now see a steady growth in demand for corporate loans and their disbursal,” a senior executive with State Bank of India (SBI) told BusinessLine .
For SBI, corporate advances – which include large corporates, corporate client group and SMEs – had grown by 5.14 per cent in the first quarter ended June 2018 at ₹9,76,199 crore.
The reversal from degrowth to growth is clear as there was 4.35 per cent decline in loans in this segment in June 2017 over June 2016.
On annual basis, too, increase in offtake is discernible. The increase in large corporate loans for 2016-17 was ₹11,854 crore, a figure the lender beat by a large margin in FY18 at ₹69,901 crore.
According to Sandeep Bakhshi, Chief Operating Officer, ICICI Bank, there was “continued growth” in the corporate portfolio. For ICICI Bank, increase in domestic corporate portfolio, excluding non-performing assets (NPAs), restructured loans and loans to companies included in drilldown exposures, was 16 per cent in the first quarter. Punjab National Bank also posted a spurt in advances extended to the large industry and MSMEs. It has been following a cluster-based approach in lending to MSMEs.
The surge in corporate loans has been coming in from diverse segments, for instance, infrastructure (except telecommunications) and trade-related advances, though there have been individual variations among banks.
“We see growth coming in from all segments of corporate loans, though there has been higher traction in SMEs,” said Puneet Kapoor, Senior Executive Vice-President, Kotak Mahindra Bank.
However, banks are still largely dependent on retail lending, including the personal loan segment. Most banks posted double-digit growth in retail portfolio, driven by a surge in demand for auto, home, personal loans and credit cards.
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