Credit growth of Indian banks falls to 8.1pc

NEW DELHI: The credit growth of all banks slowed down to 8.1 per cent in 2016-17 from 10.9 per cent in the previous year, though the aggregate deposits improved on account of massive flow of funds after demonetisation, a Dun and Bradstreet report said.

“The credit growth of all scheduled commercial banks slowed down from 10.9 per cent in 2015-16 to 8.1 per cent in 2016-17. The growth in aggregate deposits, on the other hand improved from 9.3 per cent in 2015-16 to 15.9 per cent in 201617, largely on account of a massive flow of funds into the banking system after the demonetisation of November 2016,” the report titled ‘India’s Top Banks 2017’ noted.

It said that the banks’ non-performing assets (NPAs) continued to display the highest level of stressed advances.

“The gross non-performing advances (GNPA) of banks rose to 9.6 per cent in March, 2017 from 7.5 per cent in March, 2016. The net NPA ratio of banks stood at 5.5 per cent in March 2017,” the report said.

“At present, the Indian banking sector is going through a critical phase. The credit growth has remained subdued, particularly in the case of public sector banks. Increase in stressed assets has affected the profitability of banks and therefore, deteriorating asset quality means a major challenge for the banking industry,” Manish Sinha, Managing Director — India, Dun and Bradstreet said.

The Indian banking sector has lately grappled with various challenges, including degradation in asset quality and a sharp slowdown in credit off take. — IANS