Growth in lending to priority sector slows to 5% in Dec

[1]

Bank lending to the priority sector grew by just 5 per cent on an annualised basis in December, 2011, because of lower offtake in the agriculture and MSME segments, besides a decline in micro credit.

This is the lowest rate of growth in lending to these crucial sectors in the current fiscal. Credit offtake by the priority sector had grown by as much as 29.2 per cent during the same month of 2010.

Credit disbursement to the priority sector stood at Rs 12.76 lakh crore in December, compared to Rs 12.14 lakh crore in the same month of the previous year, according to the Reserve Bank of India.

In December, bank disbursements for agriculture and allied activities went up by a mere 5.6 per cent to Rs 4.60 lakh crore.

In December, 2010, credit disbursement to the segment had gone up by 25.4 per cent on an annual basis to Rs 4.36 lakh crore.

Similarly, growth in offtake by micro and small enterprises (MSME) slowed to 11.1 per cent at Rs 4.82 lakh crore in December.

Bank credit disbursement to the sector had increased by 29.6 per cent to Rs 4.34 lakh crore in December, 2010

As far as micro credit is concerned, the sector witnessed a decline of 27.1 per cent in offtake during the month under review to Rs 21,000 crore. Micro credit had grown by over 52 per cent to Rs 28,820 crore in the same month of the previous year.

Credit to the housing sector stood at Rs 2.40 lakh crore in December, 2011, a meagre 2.3 per cent growth on an annual basis. Growth in credit to housing stood at 10.7 per cent in December, 2010, with the disbursement of Rs 2.35 lakh crore.

Bank credit disbursement to weaker sections grew by 11.1 per cent to Rs 2.15 lakh crore during the month under review.

Credit offtake by weaker sections from banks rose at an annualised rate of 28.2 per cent to Rs 1.93 lakh crore in December, 2010.

While loans to some priority sectors like agriculture and to weaker sections are disbursed at an interest rate lower than prime lending rates, other segments do not fall under the subsidised lending regime.