Credit Growth Picked Up Rapid Pace From September: SBI Study

Credit growth picked up rapid pace beginning September—jumping by Rs 1.08 lakh crore—mainly helped by housing, non-banking financial companies, and lately micro, small, and medium enterprises, said a study by the country's largest lender State Bank of India on Wednesday.

Ecowrap, the research report, further said the week up to Diwali has shown an increase in currency in circulation of Rs 30,871 crore from the previous week, thereby showing that people have been demanding cash in the festive season.

"The sectoral data for the month of September 2019, indicates that for the first time in current fiscal credit to industry turned positive and jumped by Rs 9,700 crore, of which Rs 8,200 crore is attributable to MSME sector," the report said.

As per the report, in September, the jump in retail credit at Rs 51,900 crore was nearly double that of August, of which housing loans jumped by 2.6 times. Bank lending to NBFC sector has remained robust and the year-to-date growth of such is highest across all segments at 11.3 percent.

The SBI study said its base case projection is "a modest growth revival (in third quarter) with an inventory drawdown beginning to happen more forcefully from October onwards and an accelerated government spending (Rs 3.1 lakh crore in September which is 20 percent of overall spending) to clear outstanding dues".

Further, the yearly SBI Composite Index for October declined to 49.8 (low decline) compared to 52.2 (low growth) in September. The monthly SBI Composite index remained volatile and was at 50.83 (low growth) in October compared to 51 (low growth) in September. The SBI Composite Index is a leading indicator for manufacturing activities in the Indian economy and aimed at foreseeing the periods of contraction and expansion.