As can be seen in Figure 1, the overall credit growth in the banking sector increased marginally compared to last
fortnight, which indicates that consumers have started purchasing with the arrival of festive season. Also, banks are
coming up with various festival offers to push retail credit. However, the credit growth decelerated to 5.1% and 5.7%
during the last two fortnights, compared to last year’s level of 8.8% and 8.9% respectively (as of September 27, 2019
and October 11, 2019) reflecting weak demand (compared to a year-ago period) and risk aversion in the banking
system due to COVID-19 pandemic. Also, SCBs are being very selective with their credit portfolios due to asset quality
concerns.
Despite the overall slow growth in incremental bank credit, disbursements to MSMEs continued to be strong under
the Emergency Credit Line Guarantee Scheme (“ECLGS scheme”). Under Rs.3.0 lakh crore of Emergency Credit Line
Guarantee Scheme for MSMEs, banks have sanctioned Rs. 1.88 lakh crores out of which Rs. 1.36 lakh crore were
disbursed to around 27 lakh business units till October 5, 2020 (refer report ‘Weekly Liquidity Report: October 5 – 9,
2020’).
Update_-_Growth_in_Deposits_and_Credit_-_October_24_2020Download
fortnight, which indicates that consumers have started purchasing with the arrival of festive season. Also, banks are
coming up with various festival offers to push retail credit. However, the credit growth decelerated to 5.1% and 5.7%
during the last two fortnights, compared to last year’s level of 8.8% and 8.9% respectively (as of September 27, 2019
and October 11, 2019) reflecting weak demand (compared to a year-ago period) and risk aversion in the banking
system due to COVID-19 pandemic. Also, SCBs are being very selective with their credit portfolios due to asset quality
concerns.
Despite the overall slow growth in incremental bank credit, disbursements to MSMEs continued to be strong under
the Emergency Credit Line Guarantee Scheme (“ECLGS scheme”). Under Rs.3.0 lakh crore of Emergency Credit Line
Guarantee Scheme for MSMEs, banks have sanctioned Rs. 1.88 lakh crores out of which Rs. 1.36 lakh crore were
disbursed to around 27 lakh business units till October 5, 2020 (refer report ‘Weekly Liquidity Report: October 5 – 9,
2020’).
Update_-_Growth_in_Deposits_and_Credit_-_October_24_2020Download
