Nifty99000 100%

Sensex99000 100%

Exclusive

Credit growth at pre-recession levels, RBI should go for another rate cut

Author: Sunnam Bharath Kuma/Wednesday, August 14, 2019/Categories: Exclusive

Rate this article:
5.0
Credit growth at pre-recession levels, RBI should go for another rate cut

The buzz around liquidity crunch and a lethargic credit growth in India has become shriller in the recent past. The Reserve Bank of India (RBI) thinks the system has surplus liquidity, but the real picture is totally different. India Bank Credit to commercial sector, which is seen as one of the leading indicator to interpret the health of the domestic economy has raised the red flags. According to the weekly statistical supplement released by the RBI, bank credit to commercial sector recorded a negative growth most of the times (see chart).  

The overall credit growth in India has registered a moderate upside in 2018 but it still remains at a historic low. The data from the RBI shows that the total bank credit to commercial sector has grown at a CAGR of 13.07% from post-recession period of July 2009 to July 2019, the rate of growth has slumped to CAGR of just 9.64% during the previous three years. Surprisingly, the credit growth to the services sector which normally doesn’t attract investors attention has decelerated to just 13% in June 2019 compared with 23.3% during the similar period previous year.

A pre-recession credit growth level certainly demands an additional stimulus programs and further rate cuts by the RBI, which should bring relief to the sector. (The author is a fundamental research analyst with Karvy Forex & Currencies)

Print

Number of views (638)/Comments (0)

Leave a comment

Name:
Email:
Comment:
Add comment

Name:
Email:
Subject:
Message:
x

Videos

Ask the Finapolis.

I'm not a robot
 
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
 
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above

Categories

Disclaimer

The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free