Credit Trend: lending improved in August but bank credit takes a beating

Source :Sify
Author :Finance Desk
Last Updated: Fri, Oct 9th, 2020, 11:02:14hrs
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Mumbai: Has bank lending and utilisation of funds from capital markets improved?

A report from the State Bank of India's economic and research department suggests that fund utilisation from capital markets improved by nearly 65 percent in August on a sequential basis.

In its report titled "Four months after Unlock", the agency found improvement in fund utilisation to Rs 109,998 crores for August as against Rs 66,915 crores in July.

"Overall, in FY21, fund mobilisation in capital market, increased by around 14 per cent to Rs 453,861 crore till Aug'20 as compared to Rs 398,971 crore in the same period in the previous year."

"Commercial paper issuances increased by 48 per cent in Sep' 20 to Rs 1.93 lakh crore as compared to Rs 1.30 lakh crore in Aug'20."

In terms of lending trends, the report cited that except for services and personal loans, credit to all other major sectors has declined in August.

"The bad thing is that the overall bank credit has increased in June and July by Rs 392 billion but in August, it declined by Rs 360 billion, which is mainly due to decline in credit to personal loans and infrastructure segments.

"The consumer leverage also declined in August indicating the stress on household balance sheets are now emerging."

The report also said that the lender's Business Activity Index as well as the SBI Composite Index showed an upward momentum in September.