Factories see low growth in credit

Economic activity in the manufacturing sector continues to be negative as reflected in the low growth in bank credit and the debt markets. Growth in bank credit was slower this year compared to last year.

But all was not gloom and doom as a positive growth rate was witnessed in case of agriculture, services and retail loans, said Madan Sabnavis, chief economist, Care Ratings, in a study on credit growth and the debt market. Within services, professionals category was more buoyant.

Personal loans accounted for Rs 14,22,700 crore which represent 21.4 per cent of total loans. Of this housing got the highest at Rs 7,66,300 crore. In the retail loan category credit cards outstanding was Rs 42.100 crore). Home and auto loans though displayed lower growth this year is still positive.

Corporates did not have much of a presence in the debt market.

Information on debt market reveals that overall issuances were lower this quarter. For the first two months, the financial segment dominates followed by services within which transport and communications have significant shares, said Mr Sabnavis.

He has expressed concern that most of the outstanding credit was in the category of non-food credit and has a relatively higher share of personal loans in total credit outstanding. The manufacturing sector, which acco-unted for over 40 per cent of total outstanding credit, witnessed negative growth of 2.5 per cent.