‘Credit growth may improve in H2 on refinance, telco demand’

Mumbai, Aug 26 (PTI) Terming the "laggard" creditgrowth as a "worrying" trend, the economic research wing ofcountry’s largest lender SBI today said refinanceopportunities and spectrum payout by telcos after theSeptember auction hold hope for the banks. "The worrying thing is that credit growth continues tobe laggard," it said in a note, adding, there is some hope foran uptick in the second half of the fiscal. The slowdown is primarily due to a stagnation inprojects, and the low-risk refinancing loans of completedinfrastructure projects in sectors like power and roads willhelp push the credit growth. It expects the industry’s credit growth to come at13-14 per cent for the fiscal. The telecom auctions scheduled in September will alsoresult in some credit expansion opportunities for the lenders,the report said. Apart from this, the housing, cement and autocomponents sectors will show some increased appetite forcredit, it said. Oil companies and non-bank lenders will also approachthe banks for funds in the latter part of the fiscal, it said. It can be noted that in the last fiscal, bankingsystem’s credit growth slipped to a multi-decade low of under9 per cent, but bankers have been guiding toward a better yearin the ongoing 2016-17. The fortnightly data on scheduled commercial banks’credit showed some recovery as of August 5 to 9.8 per centfrom the low of 8.7 per cent on June 10. Last week, SBI Chairman Arundhati Bhattacharya hadsaid the bank may be looking at upwardly revising its FY17credit growth target of 12 per cent as it forsees someincrease in demand toward the latter part of the fiscal. The research department also came out with its yearlycomposite index for manufacturing activity in August, whichshowed an upward momentum at 52.7 indicating moderate growth,when compared with the benchmark level of 50. The monthly composite index, however, showed a declineto 49.9 in August from 50.9 in July. PTI AA NP ABKBAS