Banking - Sectoral Credit Deployment In July: Systematix
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Systematix Research Report
In July 2021, scheduled commercial banks’ non-food credit growth remained muted at 6.2% YoY as compared to 6.4% in July 2020 and 5.9% in June 2021.
Agri/retail/services/industrials reported non-food credit growth of 12.4%/11.2%/2.7%/1.0% YoY, respectively.
On an incremental basis, non-food credit expanded for the second consecutive month.
The credit book expanded by Rs 780 billion on a month-on-month basis in July-21 but contracted by Rs 553 billion in FYTD22.
Based on the overall composition of incremental credit expansion (on a net basis), we believe that the banking system has begun to build some credit risk again as reflected in incremental credit disbursements (on a net basis) towards riskier assets like credit cards, other personal loans and vehicle loans within the retail segment and commercial real estate and non banking financial companies within the services segment.
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