Non-food credit offtake


 

  • With 6.5%, non-food credit offtake is expected to remain weak in FY21 as well.
  • An attractive bond market is attracting highly rated big ticket borrowers, away from the commercial banks.
  • Commercial banks (SBCs) are also risk averse, given the uncertainty in a market that is shored up by excess liquidity.
  • The industrial supply chain being disrupted by COVID-19 is expected to resume in H2 only.
  • Last one year, RBI has reduced repo rate by almost 285 bps.
  • The rate cut has not completely transmitted in long-term lending rate, as banks are unwilling to cut the lending rate.
  • RBI’s decision to cut CRR by 100 bps to 3% and 75 bps cut in repo rate was expected to act as a catalyst for the market sentiment. SBCs, on their part were expected to cut lending rates proportionately.
  • Lower fed rate and weak (RBI’s active currency management) domestic currency will make the external borrowings more enticing for the corporates.