SBI Report Signals Concern: Credit Growth Slumps Across Sectors

State Bank of India reports a decline in credit growth across sectors, citing negative momentum and waning base effects as factors. The slowdown reflects reduced credit and deposit rates compared to the previous year, posing challenges for growth, particularly in housing and consumer durables.

The State Bank of India (SBI) has revealed a concerning decline in credit growth across all sectors, as negative momentum outstrips waning favorable base effects. This slowdown poses significant challenges for the banking sector, with implications for economic expansion.

According to the report, as of November 15, 2024, incremental credit from all scheduled commercial banks grew by Rs 9.3 lakh crore, reflecting a year-to-date growth of 5.3%, a considerable dip from last year's Rs 19.4 lakh crore (YTD 14.2%). Deposits also experienced a slowdown, growing by Rs 13.7 lakh crore (YTD 6.7%), compared to Rs 16.0 lakh crore (YTD 8.9%) last year.

Credit contraction was evident in agriculture, industry, services, and personal loans, with a marked decline in housing and consumer durables. Industrial credit plummeted except in chemicals, construction, and rubber/plastic/paper sectors. The report calls for rebalancing credit distribution, especially in rural and semi-urban areas, to stabilize growth expectations at 11-12% for the fiscal year 2025.

(With inputs from agencies.)