Commercial credit up 15% in a year

Outstanding credit to the commercial sector crossed Rs 300 lakh crore at end-January, up 14.7% year on year, signalling a pickup in loan demand in response to the 125-basis-point cut in the policy rate by the Reserve Bank of India (RBI) over the past year to spur growth. One basis point is a hundredth of a percentage point. Incremental credit growth in the first 10 months of this fiscal year was Rs 34.5 lakh crore, up 35% over the corresponding period, data published by the RBI in its latest monthly bulletin showed.128727621 The gap between bank credit and non-banking sources of credit widened in January over the corresponding period. "This shows banks have regained the ground in providing credit," said Madan Sabnavis, chief economist, Bank of Baroda. The gap between bank and non-bank sources widened to Rs 9 lakh crore for the 10 months ending January 2026. The gap was as narrow as Rs 2.5 lakh crore in 10-months ending January 2025. "The pickup in credit offtake reflects the impact of the combination of rate cuts by RBI and significant liquidity infusion," said Gaura Sen Gupta, chief economist, IDFC First Bank. Of the Rs 34.5 lakh crore incremental flows, bank credit to the commercial sector rose nearly Rs 21.7 lakh crore. Non-bank sources (net of bank credit) stood at Rs 12.6 lakh crore. These include non-bank finance companies, housing finance companies, corporate bonds, commercial paper, overseas borrowings and equity issuances. The dip in the share of incremental credit flow from non-banking sources in the 10 months ending January is reflected in a decline in equity issuances, which fell 12% to Rs 2.97 lakh crore. However, NBFCs led the expansion in outstanding credit with 20% growth, outpacing the 14% rise in credit by commercial banks.

from Economic Times https://ift.tt/eF9Jtm6

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