Bank credit expansion projected at 15% in FY24, 12% in FY25: Icra
Icra on Wednesday 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. At 14.9-15.3 per cent, the system level credit expansion in absolute terms will be Rs 20.4-20.9 lakh crore, it said, adding this will be the highest ever incremental bank credit growth and would surpass the previous high of Rs 18.2 lakh crore 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 lakh crore or 11.7-12.6 per cent in FY25.
Weaker export demand in certain sectors, softer commodity prices, and challenges in deposit mobilisation could temper bank credit growth in FY2025, it added.
Further, the agency estimates corporate bond issuances to reach Rs 9.6-9.9 lakh crore in FY24, crossing the record level of Rs 8.7 lakh crore in FY23.
Incremental bank credit growth touched nearly Rs 16.9 lakh crore in the first nine months of FY24 far outpacing the Rs 14.1 lakh crore 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.
While incremental bank credit growth remained reasonably strong at Rs 6.1 lakh crore in Q3 and Rs 10.8 lakh crore in the first half of FY24, it was lower by Rs 1.3 lakh crore in December 2023 against Rs 2 lakh crore during December 2022.
According to Anil Gupta, a senior
