No takers for loans: Bank loan growth rate at a 58-year low

No takers for loans: Bank loan growth rate at a 58-year low

Faced with a paralysing economic slowdown, bank loans growth in India has dipped to its lowest in 58 years. Loans have increased by a mere 6.3 per cent year, according to data released by the Reserve Bank of India. The growth rate is expected to settle between 6 per cent and 7 per cent at the end of the financial year ending March 31. This would be a 58-year low.

Though government interventions could arrest a decline in loan growth after September, the rate remains in single digits. The crisis is spurred by businessmen’s unwillingness to invest in the wake of low consumer confidence.

The bank loans now stand at about Rs 100.4 lakh crores at an increase of 6.3 per cent. The loan growth in the previous year was boosted by non-banking financial institutions and housing finance companies trying to overcome their fund limits by borrowing.

This year the loans have no takers and the banking industry has a lot of factors to blame, including a sputtering economy, lower demand for working capital and the risk apprehensions of financial institutions.