Due to the government’s emphasis on public spending, bank credit offtake is anticipated to increase

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According to a research, bank credit demand is anticipated to increase as economic activity returns to normal, helped by the government’s push for increased public spending in the current fiscal year.

The gross non-performing assets (GNPA) ratio, which reached a six-year low of 5.9% in FY22, was nevertheless higher than the pre-asset quality review of 2015–16, according to the Care Edge study. However, it noted that despite a modest drop, India’s NPA ratio is one of the highest among comparable nations.

Due to ongoing deleveraging, institutional change, and government action, non-performing loans decreased in industrialised economies, it claimed. It stated that after August 2021, the bank loan growth by scheduled commercial banks (SCBs) improved to reach 13.1 percent in early June 2022, a rate last seen in March 2019, as the Indian economy navigated the pandemic-induced shocks.

The wholesale credit sector, which achieved double-digit growth after experiencing a big slowdown last year, has been the main engine of this expansion aside from retail, it said. “The outlook for bank credit offtake is positive due to the economic expansion tracking nominal GDP growth, rise in government and private capital expenditure, rising commodity prices, implementation of the PLI scheme, extension of ECLGS for MSME and retail credit push,” the report stated. This follows years of modest credit growth.