Loan growth of Indian banks fell to single digit after five months of double digit expansion, reflecting sluggish demand amid almost static factory output.
Reserve Bank of India data showed that bank loans grew 9.2% year-on-year in the fortnight ending April 29, the slowest since December last year. The low factory output over a long stretch of time has slowed the demand for corporate credit which is believed to have slowed credit growth. Data released by the Central Statistics Office showed that the factory output, based on the index of industrial production ( IIP ), rose negligibly by 0.1% in March, compared with 2% rise in February after two straight months of decline. Credit had grown 10% during the same time last year, more than the current trend. Meanwhile, India’s foreign exchange reserve fell $1.126 billion to $361.99 billion, after five weeks of steady rise.