Uptrend in credit growth, capacity utilisation robust: SBI Research

New Delhi, Jan 12: (UNI) Noting that credit growth is visible across sectors in October-December (Q3) period of the current fiscal, the SBI Research has said that its in-house survey suggests robust capacity utilisation.
Sectors, where demand for credit started picking up during last three months, include NBFCs, telecom, petroleum, chemical, electronics, gems & jewellery and infrastructure including power and roads.
“The survey suggests capacity utilisation remains robust, with more than two-thirds of respondents suggesting current capacity utilisation of more than 70 per cent, while 36 per cent respondents, from diverse sectors such as textile, petrochemicals, building materials etc. indicated better utilisation levels,” said the SBI Research report authored by Soumya Kanti Ghosh, Group Chief Economic Adviser, State Bank of India.
Ghosh sees demand from non-PSU credit outpacing that of PSU credit in Q4 FY22.
“Sectors such as healthcare, commercial real estate, pharmaceuticals, infrastructure, NBFCs, and construction will be the largesse of such credit. These are credit sought mostly by mid-rung entities,” the report said.
Co-lending with NBFCs remains one of the most preferred options of lending in current scenario as it also helps NBFCs churn its capital and offer on-lending at affordable costs, it further said.
The research shows Q3 of current fiscal has witnessed a visible expansion in credit growth across sectors.
As per the report, incremental deposits in the banking system has declined by Rs 2.2 lakh crores in this time period, whereas credit growth has picked up by Rs 3.5 lakh crore.
“It may be noted that the deposit growth in banking system has been led by CASA (Current Account Savings Accounts) deposits far outpacing time deposits with people preferring precautionary motive given the continued uncertainties,” said SBI Research eco wrap.
CASA ratio refers to ratio of deposits in current and saving accounts to total deposits. A higher CASA ratio suggests lower cost of funds as banks do not usually give any interests on current account deposits and the interest on saving accounts is usually low.
While economy has recorded strong rebound post second wave of pandemic, the ongoing Omicron wave has posed downside risks to growth.
“The worry is the recent surge in omicron infections has pulled down the SBI Business Activity Index to a two-month low,” noted the Research.