Hunger for credit down - Hindustan Times
close_game
close_game

Hunger for credit down

Hindustan Times | By, New Delhi
Sep 27, 2009 08:54 PM IST

Despite widespread talk of economic recovery, much of the revival in growth seems to be on old steam.

Despite widespread talk of economic recovery, much of the revival in growth seems to be on old steam.

HT Image
HT Image

In the slow lane

* Credit offtake slumped by 30 per cent year-on-year in the April-August period

* New infrastructure projects are getting delayed, reducing the hunger for new loans

* Oil refiners, who had borrowed heavily to balance imports with capital expenditure last year, when crude prices hit a peak, are borrowing less this year.

* Part of the slump is explained by the base effect, because the slowdown hit the economy only in the second half of 2008-09.

Bankers say they have not witnessed significant offtake of loans in the current fiscal year mainly on account of delays in infrastructure projects and less demand from oil marketing companies.

Hindustan Times - your fastest source for breaking news! Read now.

Credit offtake, in fact, dipped by more than 30 per cent in the April to August period of the current fiscal compared with the corresponding period of the previous year. New projects are not taking off as fast as expected.

For example, as many as 37 infrastructure projects are running behind schedule in Maharashtra while in Assam about 36 projects have got delayed, while in Andhra Pradesh, the number is 31.

Oil marketers like Indian Oil Corp had borrowed heavily in 2008-09 to meet their capital expenditure last year as global crude prices surged to more than $140 a barrel areound June 2008, inflating their import bills.

“This year, the demand from oil companies has dropped while last year, they borrowed heavily to keep up with the high global crude prices,” said Allen C.A. Pereira, chairman and managing director, Bank of Maharashtra.

A senior private sector bank executive, who did not want to be identified, said it is key that the slowdown began in the latter part of the last fiscal year.

“The slowdown hit the country only during the third quarter, there was very high appetite for credit in the first two quarters of the previous fiscal,” the executive said, explaining the year-on-year credit slump.

Credit rater Crisil’s principal economist D.K.Joshi said the current credit pattern was in line with the downturn.

“Though the worst is behind us, it will take time for credit growth to pick up, but once it does, the Reserve Bank is likely to increase policy rates to balance inflation,” he said.

Unlock a world of Benefits with HT! From insightful newsletters to real-time news alerts and a personalized news feed – it's all here, just a click away!- Login Now!
Stay informed on Business News along with Gold Rates Today, India News and other related updates on Hindustan Times Website and APPs
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Thursday, March 28, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On