Home > Bank Credit Growth, Telecom > Credit offtake indeed gets a 3G push

Credit offtake indeed gets a 3G push

According to the latest RBI data, loans extended by banks to individuals and businesses — non-food credit — rose by Rs 55,150 crore to Rs 32,35,925 crore during the fortnight ended June 4, 2010, over the May 21 levels. This is 19.9% higher than the year-ago level. At the same time, food credit — loans for food procurement—dipped 11.8%. Total bank credit, including food and non-food credit, rose Rs 57,896 crore during the fortnight to touch Rs 32,88,074 crore as on June 4.

Increase in lending was in line with our expectations. In my earlier post (refer: Will 3G give the required push to credit growth?), I had mentioned that credit offtake numbers for May 31 are expected to show a YoY rise, since it is expected to reflect the loans taken by telecom companies to pay for the 3G spectrum fee. Telcos are believed to have raised loans of around Rs 40,000 crore to help finance the total spectrum fees of Rs 67,700 crore. corporates are believed to withdrawn large sums of money parked with liquid schemes of mutual funds to finance a large chunk of the balance.

Banks have also withdrawn funds parked in government bonds to fund this sharp growth in loan demand. Bank investments in government bonds dipped Rs 9,024 crore during the fortnight, taking the banking sector’s outstanding loan investment to Rs 14,35,703 crore as on June 4. It will also be interesting to see the mutual fund industry’s asset figures for this period.

Credit offtake is likely to be higher in June, as companies make advance tax payments and raise funds for wireless broadband spectrum. However, it is to be seen whether this growth is sustainable.

Credit Growth
  Amount in Rs crore % Y-o-Y Growth
Total Bank Credit Food Credit Non Food Credit Total Bank Credit Food Credit Non Food Credit
9-Apr-10

 3,241,225

48,149

31,93,076

17.0

3.0

17.2

23-Apr-10

 3,214,742

47,979

31,66,763

17.1

-2.0

17.4

7-May-10

 3,227,771

52,627

31,75,144

17.3

-4.7

17.7

21-May-10

 3,230,178

49,403

31,80,776

18.1

-14.1

18.8

4-Jun-10

 3,288,074

52,149

32,35,925

19.3

-11.8

19.9

Source: RBI
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