Credit deployment still negative in most sectors: Assocham

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New Delhi, April 29 (IANS) Most Indian industry sectors have reported negative growth in deployment of gross bank credit, a fallout of banks’ inability to lend being saddled with mammoth non-performing assets (NPA), or bad loans, coupled with lack of appetite for fresh investment by highly indebted corporate India, industry body Assocham said on Sunday.

Following a study of Reserve Bank of India (RBI) data, Assocham noted how sector after sector, including sugar, petroleum, coal, petrochemicals, cement, basic metals and metal products have shown a drop in deployment of gross bank credit between minus two per cent and 19 per cent in fiscal 2017-18.

“The problem of twin balance sheets is very much reflected in the RBI data of credit deployment. While the banks are struggling with their rising NPAs and huge requirements of provisioning that goes with the same, corporate India is still reeling under high leverage in sectors like roads, power, telecommunication and others,” said Assocham Secretary General D.S. Rawat said in a statement here.

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The fertiliser sector has shown a huge fall in credit deployment to the extent of 19.3 per cent up to February 16, on sequential basis in the last fiscal, the statement said.

Petrochemicals firms also showed a huge negative growth of over 19 per cent in credit deployment up to February 16, while key infrastructure like road, power and telecommunication, also showed a negative trend between 1.6 per cent and six per cent.

“But a large part of the industry is still not out of the woods, if the credit deployment is any indication,” Assocham said, and that it would still take a few more quarters before things look up.

“There needs to be a sense of urgency in repairing the balance sheets of the PSU banks. The Rs 2 lakh crore capial infusion, as announced by the government must be speeded up, even as the lenders wait impatiently from some cash accruing back as a result of successful resolution plans under the Insolvency process,” it added.

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–IANS

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