In April, which was the first full month of the national lockdown to include the spread of Covid1919, bank loans shrank 1.2 percent monthly across sectors such as agriculture, manufacturing, services, and retail.
According to the Reserve Bank of India data, gross bank credit was down to Rs 91.53 trillion in April, from Rs 92.63 trillion in March. Bank Loans to the industry —large, medium, small, and micro-units — declined 0.7 percent to Rs 28.84 trillion in April.
Bankers have said that the first month of the new financial year is usually a lean period for bank loans. This time, however, bank credit demand was also affected by the lockdown. May saw some credit transactions as parts of the country saw economic activity restart, but at a lower scale. In the services sector, the pattern of bank credit contraction was evident in segments such as wholesale trade, retail trade, transport operators, and credit tourism, in addition to hotels and restaurants.
Bank Credit declined 0.8 percent to Rs 25.74 trillion in April. The contraction (reduction) in loans in the retail segment was 2.5 percent, to Rs 24.90 trillion. Credit card outstanding, a segment of the retail category, was down 10.3 percent to Rs 96,978 crore in April, from Rs 1,08,094 crore in March 2020. On a year-on-year (YoY) basis, gross bank credit growth decelerated to 7.4 percent in April this year, from 11.7 percent in the year-ago period, the RBI said in a statement.
Growth in bank credit to agriculture & allied activities slowed to 3.9 percent in April 2020, from 7.9 percent in April 2019. Growth in bank credit to industry decelerated to 1.7 percent in April 2020, from 6.9 percent a year ago.
Within the industry, Bank credit growth to ‘petroleum, coal products & nuclear fuels’ and ‘paper & paper products’ accelerated. However, growth in Bank credit to mining & quarrying, chemicals & chemical products, construction, and textiles decelerated. For the services sector, it decelerated to 11.2 percent in April this year from 16.8 percent a year ago. Personal loans growth decelerated to 12.1 percent in April 2020, from 15.7 percent in April 2019, it added.