MUMBAI:Borrowing by the construction sector actually grew to almost 20 per cent in the year ended March 31, from its previous year’s level of 17.7 per cent, even though overall bank borrowing by manufacturing sector slumped to 5.6 per cent in year to March from 13.1 per cent a year earlier.
Manufacturing forms the largest chunk of non-food credit of banks with 43 per cent share, with services 23 per cent, which together give them two-thirds of overall bank credit.
Among other segments that grew faster than the average included food processing, infrastructure, basic metal and metal products and engineering. The strong growth in credit to construction may be attributed to the relatively higher activity in the housing segment and commercial real estate sector, said Care Ratings.
Yet, borrowing by manufacturing was not as low as bank credit data showed. Companies resorted to borrowing through commercial paper in the money markets, where rates are much lower compared with banks. Adding CPs to the overall borrowing increases credit growth to 7.6 per cent to manufacturing, said Madan Sabnavis, economist, Care Ratings.
Borrowing by retail almost maintained the earlier year’s level while loans to agriculture posted growth on a smaller share.
Among personal loans, while borrowing for purchase of house and automobile rose, a sharp jump was noticed in credit cards, indicating increase in spending by individuals. Yet, among industry the sharpest fall was to fertilizers and petrochemicals.
Source : The New Indian Express
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