Trade, consumption and construction gobble up most bank credit

Three key sectors in the economy—wholesale & retail trade, consumption and construction— have gobbled up most of the private sector credit by banks, which are also the main drivers of the economy in the postlockdown period.

Meanwhile, manufacturing had a similar or growing share of loans to that of construction.

According to the data analyzed by Fitch Ratings for the first nine months, private banks had extended close to 20 percent of their loans to wholesales & retail trade sector while the State-run commercial banks had roughly above 10 percent share into the same sector.

However, Fitch has failed to recognize the amount of loans disbursed into the burgeoning agricultural sector as a separate category. But the ‘uncategorized’ loans in Fitch’s categorization had the largest share of loans.

Meanwhile, the consumption accounted for the largest share of loans by the private sector banks during the nine months, close to 20 percent of total loans while the State lenders had a slightly lesser share. Fresh credit for consumption did not take off this year as the pandemic blunted the desire and access for consumption.

However, the loans for consumer durables and other goods may have had some influence on consumption credit in 2020 as seen from the performance recorded by consumer durables retailers.

Meanwhile, construction had little above 10 percent share of the total loans of private banks and roughly 20 percent of State banks, as housing and building activities rebounded strongly in the aftermath of the lockdowns.