Priority sector lending growth slows in 2010-11

Bank credit to all priority sectors, barring services and, micro and small enterprises, witnessed a slower growth during 2010-11 as against the previous fiscal.

According to the latest data from the Reserve Bank, the total credit to priority sector registered a growth of 15.2% in 2010-11 and stood at Rs 12.58 lakh crore. The growth rate was lower than the 17.1% reported in the previous fiscal.

This happened even though bank lending to the overall economy went up by 20.6% in the last fiscal from a growth of 16.8% in 2009-10.

Within the priority list, credit to agriculture and allied activities, manufacturing, housing, micro-credit, education loans, state-sponsored organisations for SCs/STs, weaker sections and export credit registered a lower growth last fiscal as compared to 2009-10.

The priority sectors are those where banks have been directed by the RBI to issue loans on reduced interest rates with discounts to promote these fields.

Banks' lending to agriculture and allied activities stood at Rs 4.60 lakh crore in FY'11 as against Rs 4.16 lakh crore, an increase of 10.6%. This is far below the growth of 22.9% registered by the sector in 2009-10.

Credit growth to manufacturing also went down by half. It stood at Rs 2.29 lakh crore in 2010-11 as against Rs 2.06 lakh crore in 2009-10, a rise of 11%. In the previous fiscal, credit offtake by the manufacturing sector had grown by 22.1%.

Housing sector loan credit went up by 5.9% in the last fiscal, as against a rise of 10.5% in FY 10. Total outstanding credit to housing stood at over Rs 2.30 lakh crore in 2010-11, up from nearly Rs 2.18 lakh crore in the previous fiscal.

Among other priority sectors, micro-credit saw a growth of 23.4% in the last fiscal compared to a jump of 31.9% in 2009-10. Education loans went up by 18.7% in FY-11 as against 30.1% in FY-10.

What is noticeable is that outstanding credit to state-sponsored organisations for SCs/STs decline in the last fiscal by 25.5% to Rs 2,048 crore from Rs 2,749 crore. In 2009-10, bank credit to the sector had gone up by 12.2%.

Credit to weaker sections grew by 15.5% in 2010-11, compared to a growth of 26.9% in the previous fiscal. Export credit from banks was up 10.2% in the last financial year as against a rise of 11.2% in 2009-10.

Source: Business Standard