Moderate bank credit growth at 8.5 pcs in fiscal year 20: Icra

New Delhi, November 4 () The growth of bank credit can sharply decelerate to 8-8.5 percent during 2019-20 from 13.3 percent in the last fiscal year, mainly due to the decrease in incremental credit in the first half of the year Current prosecutor, according to the Icra rating agency said in a report.

In addition, given that bond markets remain risk-reluctant towards NBFCs, annual growth in the volume of outstanding bonds is expected to moderate to about 4 percent in fiscal year2020 from 12 percent in fiscal year. 2019, he said.

In addition, recent changes in mutual fund regulations are likely to result in a decrease in the volume of commercial paper (PC) pending by March 2020, he said.

Taking into account these three internal sources of financing, that is, bank credit, corporate bonds and outstanding CP, Icra expects the growth of interannual credit to decrease to 6.2-6.8 percent in fiscal year 20 from 13.5 percent in the last financial year

A change from large borrowers, such as NBFCs and housing finance companies (HFCs) to the banking system because of their financing requirements, had fueled the growth of bank credit in fiscal year 19, he said.

However, factors such as silenced economic growth, lower working capital requirements of several borrowers, as well as risk aversion among lenders, have compressed the incremental credit in the first half of the current tax, he said.

Incremental bank credit has decreased by Rs 0.19 billion during H1 FY'20, in contrast to the increase of Rs 0.81 billion during H1 FY'18 and Rs 3.51 billion during H1 FY'19, he said.

Recent data on bank credit published by the Reserve Bank of India (RBI) reveal that the contraction in the incremental credit pending services, as well as industrial segments, offset all credit growth to the retail segment during the H1 FY20 said. Within the services, the outstanding credit for NBFC increased. However, the decrease in commercial credit and other services (which also includes HFC) resulted in a general contraction of the outstanding credit for the service segment in H1 FY20. DP BAL