SBI index foretells low growth
Moneylife Digital Team 21 March 2016
Bank credit to domestic export sector has suffered due to fall in external demand as is visible in major export sectors like textile, gems and jewellery leading to contraction in demand of credit
 
The yearly State Bank of India (SBI) Composite Index for March 2016 has declined below 50 and is at 49.5 (low decline), compared to last month index of 51.3 (low growth), portending low growth. 
 
"The good news is that the fortnightly data of all scheduled commercial banks (ASCB) indicates that credit off-take (YoY) has increased to 11.5% as on 4 March 2016, compared to last year growth of 9.8% on 6 March 2015. However, refinancing constitutes much of the credit growth, hence it may be difficult to say whether credit growth has picked up materially or in a sustained manner," the SBI said in its Ecowrap note.
 
 
"In particular," it said, "bank credit to domestic export sector has suffered due to fall in external demand as is visible in major export sectors like textile, gems and jewellery. This has led to contraction in demand of credit. Furthermore instances of dumping have made revival of certain sectors difficult, thus depressing the demand of credit. In case of pure intermediate goods sector like mining, the fall in commodity prices has dented margins in mining. At the current low levels of prices, it is difficult to market a low grade ore with higher extraction cost."
 
According to the SBI Ecowrap, the incremental lending has been mostly to the personal loan segment, especially housing, and also Mudra. The overall credit-deposit ratio is at 77.1 as on 4 March 2016 from 76.4% a year ago and 76.6% in 20 March 2015.
Comments
Sunil Anand
8 years ago
hopefully there's a brighter side, and there would be good growth in the future..

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