IGI Logo

Rating agency Icra has said that it revised upward its bank credit growth projection at 14.9-15.3 per cent this fiscal, but said the same will lose steam and grow at 12 per cent next fiscal. It said at 14.9-15.3 per cent, the system level credit expansion in absolute terms will be Rs 20.4-20.9 trillion. It stated this will be the highest ever incremental bank credit growth and would surpass the previous high of Rs 18.2 trillion recorded in FY23 at a growth rate of 15.4 per cent.

The agency had earlier estimated a 12.8-13 per cent credit demand for this fiscal. However, citing the rising global headwinds and also the higher base coupled with the challenges in deposit mobilisation, the agency said it expects the rate of incremental credit expansion to slow down to Rs 19-20.5 trillion or 11.7-12.6 per cent in FY25. It added weaker export demand in certain sectors, softer commodity prices, and challenges in deposit mobilisation could temper bank credit growth in FY2025.

Further, the agency estimates corporate bond issuances to reach Rs 9.6-9.9 trillion in FY24, crossing the record level of Rs 8.7 trillion in FY23. Incremental bank credit growth touched nearly Rs 16.9 trillion in the first nine months of FY24 far outpacing the Rs 14.1 trillion expansion in the corresponding period last year. This was driven by the retail segment and non-bank finance companies, with annual growth of 33 per cent and 23 per cent, respectively, as of November 18, 2023.