Credit growth likely to be brisk in FY24 if inflation moderates: Survey

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Credit growth likely to be rapid for MSMEs in FY2023-24 Introduction Inflation remains benign The cost of credit is low, said the 2022-23 Economic Study presented in Parliament on Tuesday.

the Micro, small and medium enterprises sector It witnessed a credit growth of about 31 percent in the period from January to November 2022.

“If inflation falls in FY24, and if the real cost of credit does not rise, credit growth is likely to be rapid in FY24,” the survey said.

Speaking of the banking sector in India, the The survey said he also responded On par with demand for credit, growth in credit year-on-year since the January-March quarter of 2022 has moved into double digits and is picking up in most sectors.

transformation in PSBs

The finances of Public Sector Banks (PSBs) have undergone a major turnaround as profits are booked at regular intervals and their non-performing assets are fast-tracked for faster resolution/liquidation by the Insolvency and Bankruptcy Board of India (IBBI). .

Meanwhile, she said the government is providing adequate budget support to maintain PSBs well capitalized to ensure that the capital risk-adjusted ratio (CRAR) remains comfortably above adequacy threshold levels.

However, financial strength has helped banks offset lower debt financing provided by corporate bonds and higher interest/hedge costs on the ECB so far in FY23, adding, higher yields on corporate bonds and higher interest/hedge costs on the ECB. These tools made it less attractive than the previous year.

The survey said growth is expected to be brisk in FY24 as India’s credit disbursement and capital investment cycle is expected to unfold with strengthening balance sheets of the corporate and banking sectors.