Bank lending to medium-sized industries rose in the six months ended September even as credit to most other segments contracted.
Credit to medium-sized industries rose 13.8% between March and September 2020, according to monthly credit data released by Reserve Bank of India. The outstanding loans to this segment rose to Rs 1.2 lakh crore as on Sept. 25 compared with Rs 1.05 lakh crore as on March 27.
At the end of August, the banking system reported outstanding loans worth Rs 1.07 lakh crore, up 1.7% from March.
“The government's emergency credit scheme for smaller borrowers is surely helping the momentum for medium-sized enterprises," Soumya Kanti Ghosh, group chief economic adviser for State Bank of India, said. "The credit is also flowing to smaller borrowers, but the proportion may not be the same.”
In May, the government announced the emergency credit line guarantee scheme worth Rs 3 lakh crore, aimed at providing emergency credit to micro, small and medium enterprises and self-employed individuals affected by the Covid-19 pandemic. It is part of the Rs 20 lakh crore economic package announced by the government earlier this year to protect the economy.
By Oct. 8, the government announced that Rs 1.87 lakh crore worth loans had been sanctioned by banks and non-banking financial companies under the scheme. Of this, Rs 1.36 lakh crore had been disbursed to MSMEs.
Micro and small, and large industries saw their outstanding loans go down between March and September. Outstanding loans to micro and small industries stood at Rs 3.6 lakh crore in September compared with Rs 3.8 lakh crore in March. For large industries, loans contracted 5% on a year-to-date basis to Rs 22.9 lakh crore during the period.
Overall non-food credit fell by 1% on a year-to-date basis in September to Rs 97.17 lakh crore.
Loans to retail customers rose 0.7% between March and September to Rs 25.71 lakh crore. In August, outstanding loans to retail customers was at Rs 25.48 lakh crore, down 0.2% from Rs 25.53 lakh crore reported in March.
The Covid-19 pandemic and the resultant national lockdown has affected credit flow to multiple sectors, including unsecured retail lending.
In the retail category, loans extended for consumer durables saw a sharp contraction—outstanding loans stood at Rs 6,661 crore in September compared with Rs 9,298 crore in March, a fall of 28.3%. At the end of August, outstanding loans to the category stood at Rs 9,053 crore.
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