Money & Banking

Huge slowdown in credit offtake a cause of concern for banking industry: SBI DMD

Our Bureau Kolkata | Updated on June 29, 2021

Deposit growth has been close to 10 per cent in May 2021   -  The Hindu

VS Radhakrishnan says lower consumption has also been affecting demand

The the huge slowdown in credit offtake is worrying banking sector with growth in hit due to lack of investments from the private sector and low capital expenditure by corporates, said VS Radhakrishnan, Deputy Managing Director at State Bank of India.

Deposit growth has been close to 10 per cent in May 2021 as customers opt for savings rather than consumption.

Also read: Talcher Fertilizers secures ₹9,560 crore loan from SBI-led consortium for coal gasification

“The slowdown in credit growth has been at around 5.3 per cent in FY21, the lowest in the last three-four years. It is a matter of serious concern. Private sector is seeing a huge slowdown in fresh capex commitment and large corporates have gone in a big way deleveraging themselves,” Radhakrishnan said at a webinar on outlook on the economy due to Covid surge and impact on the banking sector, organised by the Merchants’ Chamber of Commerce & Industry.

Weak consumer sentiment

Consumer sentiment is weak and gearing for medical expenses due to pandemic worries has pushed people avoid spending, and this has hit demand.

“People are in a wait-and-watch-mode. Credit offtake can happen only when investment cycles come back and that can happen only when confidence comes back and private investments will follow when confidence returns,” he said.

However, once the economy bounces back, government starts investing in infrastructure and private sector gets back its confidence to invest, credit offtake will start improving in the next three-to-six months. “Both Central and State governments should try to boost consumption by taking liberal view on the fiscal front. The gradual unwinding of lockdown and a larger vaccination drive will help us recover from the lows of Covid-19,” he said.

Published on June 28, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like