Bank credit to midsize businesses increases 21% in February, data shows
Bank lending to midsize businesses grew 21 percent year-on-year in February even as a contraction (-1.5 percent) in loans to large industrial units weighed on lending disbursements to industry .
In January of this year, loans to large units were in the contraction zone (-2.5%), while for medium-sized entities it was 19.1%.
Credit to micro and small businesses also rose to 1.5% in February, from 0.9% in January, according to data from the Reserve Bank of India (RBI).
Bankers said there was a recovery in credit due to a host of factors, including economic recovery, regulatory support, government guarantees for emergency credit and liquidity support.
Loans outstanding to large corporations continue to decline as many have repaid existing loans, taking advantage of lower interest rates in a cash-rich system. As the demand for working capital increases, there is very little activity on the capital spending side, the bankers said.
Continuing its upward trend, growth in credit to agriculture and related activities accelerated to 10.2% in February (5.5% in February 2020) from 9.9% in January 2021. A good monsoon and a robust rural economy have been a major relief from the pandemic. battered economy.
Credit growth to the service sector accelerated to 9.3% in February (6.9% in February 2020) from 8.4% in January 2021.