1/5
Poor credit offtake
In the wake of the coronavirus pandemic, the global economy, including India’s, has slowed down considerably. In order to get the wheels spinning again, the government and the RBI introduced a number of financial schemes, but recent data suggests that corporations have become highly risk-averse in the face of uncertainty.

2/5
Multi-decade low
As ET reported, bank credit growth will hit a multi-decade low of 0-1% which will be nearly 800 bps lower than the 8-9% growth expected before the pandemic, Crisil ratings said on June 8. The forecast presumes a base case scenario of gross domestic product contracting 5% this fiscal.

3/5
Corporate portfolio de-growth
The corporate loan portfolio, which constitutes almost half of total credit, is expected to be the worst-hit, and de-grow this fiscal due to disruption in capacity utilisation, as per the ratings agency. Further estimates suggest that retail lending, which is about a fourth of overall credit, is also expected to slide amid job losses and salary cuts that will lead to reduced expenditure on discretionary items. Purchase of new homes and vehicles are expected to be delayed, impacting demand for financing.

4/5
Consumer spending hit
On the deposits front, there was a surge of Rs 4.83 lakh crore during the first lockdown and Rs 3.62 lakh crore in the second lockdown, which is indicative of “significant risk aversion in consumer spending”, a SBI note pointed out.

5/5
Silver lining
Though the silver lining as per Crisil is, MSME loans which are expected to grow the most at 6-7% this fiscal, riding on the government’s stimulus package – particularly the Rs 3 lakh crore Guaranteed Emergency Credit Line – and are likely to be driven by public sector lenders.