1st time in FY20, credit ex­pands in sin­gle digit

The Times of India (New Delhi edition) - - Times Global -

Mum­bai: Re­flect­ing the deep­en­ing eco­nomic cri­sis aris­ing from both struc­tural and cycli­cal is­sues and a mas­sive fall in con­sump­tion de­mand, bank credit growth rate, for the first time this fis­cal, slowed to sin­gle digit at 8.8% to Rs 97.71 lakh crore dur­ing the fort­night to Septem­ber 27, ac­cord­ing to RBI data.

In the first fort­night of the fis­cal end­ing April 12, the credit de­mand grew 14.2% af­ter clos­ing the pre­vi­ous fis­cal at 13.2%. Through­out this fis­cal so far, credit growth has been in the low dou­ble-dig­its. On Thurs­day, global rat­ing agency Moody’s slashed its GDP growth fore­cast to 5.8% from 6.2% ear­lier.

The down­ward re­vi­sion came in af­ter the first-quar­ter GDP printed at a six-year low of 5%, forc­ing a “sur­prised” RBI to mas­sively slash its fore­cast by a full 80 ba­sis points (100bps = 1 per­cent­age point) to 6.1% within a span of just two months and by 140bps from its April fore­cast.

Since the Q1GDP, there has not been any pos­i­tive data com­ing out, bar­ring in­fla­tion, which re­mains tamed. Be it IIP num­bers or ex­ports or core sec­tor data, ev­ery­thing has been head­ing south month af­ter month.

On top of it, tax col­lec­tions, both di­rect and di­rect, have also been sprint­ing down. While in­come tax col­lec­tion dur­ing the first half just inched up 5% against a bud­geted es­ti­mate of 17.5%, the all im­por­tant GST col­lec­tion has never touched the de­sired Rs 1 lakh-crore-mark bar­ring in April.

In the quar­ter, In­fosys’ rev­enue grew 11.4% on a con­stant cur­rency ba­sis com­pared to last year. Con­stant cur­rency dis­counts the im­pact of cross­cur­rency fluc­tu­a­tions. In com­par­i­son, TCS grew at 8.4%, af­ter four quar­ters of dou­ble-digit growth. In re­ported terms, In­fosys’ rev­enue was up 9.9%, higher than TCS’ 5.8%.

“In fi­nan­cial ser­vices, we have had a de­cent run with a few quar­ters of dou­ble-digit year-on-year growth,” CEO Salil Parekh said. BFSI growth rate was 10.3%, com­pared to TCS’ flat growth. The num­bers helped the com­pany raise the lower range of its rev­enue guid­ance for the year to 9% from 8.5%, though it kept the up­per range in­tact at 10%.

“There is some weak­ness in cap­i­tal mar­kets and we see

The re­tail ver­ti­cal con­tin­ued to be a pain point, grow­ing just 1.1%. “Re­tail is closely linked to con­sumer sen­ti­ment. The spends in re­tail have come down and, in the last quar­ter and this, we have seen some soft­ness and slow­down,” chief op­er­at­ing of­fi­cer Pravin Rao said.

In­fosys is trans­fer­ring the business of its wholly owned sub­sidiary Skava (Kal­lidus and Skava are to­gether re­ferred to as Skava) to it­self, sub­ject to reg­u­la­tory ap­provals for a con­sid­er­a­tion based on an in­de­pen­dent val­u­a­tion. In­fosys’ mar­gins went up 1.2% to 21.7% com­pared to the pre­ced­ing quar­ter, which it at­trib­uted to higher util­i­sa­tion of em­ploy­ees and greater off­shoring of work to In­dia.

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