Sept credit offtake at 14.6%

Driven by commercial papers (CPs), the record low credit growth seems to have finally turned around. Outstanding credit in the system till the end of September clipped at 14.6 per cent to ~80.09 lakh crore, against 13.6 per cent a year ago, according to Reserve Bank and Sebi data.

At a paltry 5.08 per cent, fiscal 2017 was the worst year in more than six decades for bank credit — the lowest since fiscal 1953 when it grew at a much lower 1.8 per cent. This growth was not led by bank credit but by commercial papers. The year-on-year bank credit growth as of September 15 was lower at 7.5 per cent, against a deposit growth of 10 per cent, according to RBI's fortnightly data. Industrial credit rose to ~75.45 lakh crore during the reporting month, up from ~66.4 lakh crore a year ago and ~59.36 lakh crore in September 2016.

Corporate bonds during the period inched up to ~25.87 lakh crore from ~21.95 lakh crore and ~18.66 lakh crore. CPs rose to ~3.93 lakh crore from ~3.43 lakh crore and ~2.86 lakh crore, respectively, according to regulatory data.

As the industry and the economy inches back to normalcy after the GST disruptions, outstanding loans (non-food credit) from banks to the industry and individuals stood at ~80.09 lakh crore as of September 29, while growth in food credit was lower at 13.6 per cent, showed Reserve Bank data.

But a closer reading of the numbers show that this was not driven by bank credit rather the lenders' active participation in the bonds and commercial papers market.

Outstanding credit-loans and bonds and CPs grew 14.6 per cent on an annual basis by end September.