Covid-19 crisis: Banking credit shrinks 1.7% in May as lockdown bites

covering all segments — agriculture, industry, services, retail, and priority — shrunk by 1.7 per cent in May, compared to March. May was the second full month of the nationwide

According to Reserve Bank of India (RBI) data, gross was down to Rs 91.08 trillion in May, from Rs 92.63 trillion in March.

On a year-on-year (YoY) basis, gross growth decelerated to 7 per cent in May 2020, from 11.5 per cent in May 2019, the RBI said in a statement.

Loans to industry — large, medium, small and micro — declined by 1.5 per cent in the two months to Rs 28.61 trillion in May. The micro and small segment showed a 7.6 per cent slump, medium size a decline of 5.4 per cent, and large segment a fall of 0.4 per cent.

ALSO READ: April-May fiscal deficit at 58.6% of fiscal year target as revenue slumps

The retail segment, covering categories like housing, credit cards, and vehicle loans, contracted 2.9 per cent (Rs 74,790 crore) in the two months. The outstanding retail credit stood at Rs 24.78 trillion. Credit card outstanding — a key segment of the retail category — declined by 14.1 per cent to Rs 96,978 crore in May, compared to Rs 1.08 trillion in March.

The housing loan portfolio also shrunk by 0.7 per cent to Rs 13.29 trillion in May, from Rs 13.38 trillion in March.

Bankers said the June quarter is usually lean, and this year the has only added to demand (for credit) woes. There has been some traction in credit following resumption in economic activity in some belts, albeit on a lower scale. Demand for working capital from the emergency credit line, however, has improved in June.


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