| Indian banks’ credit falls on low demand |
MUMBAI Indian banks’ advances shrunk since the start of the current fiscal year as companies hold back new investments in a slowing economy, and a weak monsoon dampened demand for agriculture credit. As of July 27, banks’ credit declined about 6 per cent since April 6 to Rs47,029.7 billion, data from the Reserve Bank of India showed on Wednesday. It fell 0.5 per cent from two weeks ago.
Banks are not rolling over unsecured short-term corporate loans that are used by companies to meet working capital needs on concerns over asset quality, which is one of the reasons for the decline in advances, a senior official with a state-run bank said.
“Short-term corporate loans are getting repaid. Also, the acreage under cultivation is less because of insufficient rains, and crop loans are bound to come down when the acreage is less,” said the official.
He said the monsoon season typically sees lower demand for credit from companies, and it generally picks up after September.
Reuters
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