State-run banks’ loan melas recount 2 different stories
MUMBAI: Doubts about the effectiveness of the government’s loan melas have surfaced after data released by the Reserve Bank of India (RBI) contradicted the finance ministry.
The finance ministry said in a statement on December 3 that public sector banks (PSBS) have disbursed loans worth ₹2.39 lakh crore in November to non-bank lenders, large and small businesses, as well as farmers, and ₹2.52 lakh crore in October, for a total of ₹4.91 lakh crore in the two months. This data was cited by the government to show the revival of credit flow and the success of its loan melas, aimed at boosting consumption in a slowing economy.
“PSBS being adequately capitalized and record recovery underway, have sufficient liquidity to support credit growth,” the statement said.
RBI’S December 6 fortnightly data on credit growth of commercial banks, however, showed that they (including non-state ones) have seen incremental credit growth of ₹89,605.52 crore (including food credit) and ₹58,386.5 crore of non-food credit between September 27 and November 22. RBI gives loan disbursements net of repayments by borrowers in the same period.
This means banks would have had to disburse a staggering ₹4.3 lakh crore in the last eight days of November to meet the ₹4.91 lakh crore figure.
While the RBI numbers are a collation of credit data reported by individual banks to the central bank on alternate Fridays, the source of the finance ministry data is not known. The discrepancy comes at a time when the government is being criticised for withholding unfavourable survey data on key economic indicators, ranging from jobs to consumer spending.
Responding to a Right to Information query by Mint on bankwise sanctions and disbursal during the first phase of the outreach programme, the ministry did not provide any data. In its response on November 13, the ministry said it “had no role with regard to selection of beneficiaries, etc”.
Emails sent to RBI and the finance ministry remained unanswered till the time of going to press.
Experts are puzzled by the discrepancy between the information given by the two sources.
“The magnitude of variance in credit flow numbers reported by these two sources is striking, considering these numbers are reviewed by both domestic and overseas investors. It is therefore important that some data consistency is established. That would help the system in a big way,” said Ashvin Parekh, managing partner at consulting firm Ashvin Parekh Advisory Services.
In September, finance minister Nirmala Sitharaman nudged state-run lenders to reach out to customers and signal their willingness to lend during the festive season. The first phase of the loan mela was conducted during October 1-9 across 250 districts to help meet credit demand during the festival period. This outreach programme was part of a series of measures taken by the government to boost demand, amid concerns over slowing economic growth. September quarter GDP growth slowed to a six-year-low of 4.5% even as retail inflation quickened, stoking worries of stagflation. Non-food credit has grown 7.83% to ₹9.77 lakh crore in the November 22 fortnight from a year earlier, slower than the previous fortnight.
Of the total ₹4.91 lakh crore disbursed, PSBS have disbursed ₹25,525 crore in November and ₹19,628 crore in October to nonbanking financial companies (NBFCS), according to the finance ministry statement cited earlier. However, RBI data on sectoral deployment of bank credit showed that outstanding loans to NBFCS between September 27 and October 25 shrank by ₹166 crore to ₹7.13 lakh crore.
The divergence in disbursement numbers occurred in October as well. The finance ministry said on October 14 that banks disbursed ₹81,781 crore of loans during the first phase of the outreach programme between October 1-9. Data released by RBI on October 24 showed that incremental nonfood credit between September 27 and October 11 was ₹21,439.87 crore and the outstanding credit was ₹97.28 lakh crore as on October 11.