Page 401 - ES 2020-21_Volume-1-2 [28-01-21]

28 Economic Survey 2020-21 Volume 2

1.31 Bank credit remained subdued in FY 2020-21 amid risk aversion and muted credit appetite
(Figure 29). The profile of wholesale bank credit during April-November 2020 reflected this
trend across both public sector and private sector banks. While overall bank credit growth and
credit to commercial sector gradually picked up from its April lows to reach 6.7 per cent and
6.2 per cent YoY respectively as on 1 January, it remained sluggish compared to previous year
st
levels. Credit growth to agriculture and allied activities accelerated to 7.4 per cent in October
2020 from 7.1 per cent in October 2019. October 2020 saw resilient credit flows to sectors such
as construction, trade and hospitality, while bank credit remained muted to the manufacturing
sector. Credit growth to the services sector accelerated to 9.5 per cent in October 2020 from 6.5
per cent in October 2019. While personal loans registered a decelerated growth of 9.3 per cent
in October 2020 as compared with 17.2 per cent growth a year ago, vehicle loans continued to
perform well, registering accelerated growth of 8.4 per cent in October 2020 vis-a-vis a growth
of 5.0 per cent in October 2019.

Figure 29: Growth in Wholesale Bank Credit

8 Public Sector Banks Private Banks All Scheduled Commercial Banks

6
YoY growth (Per cent) 2
4

0

-2

-4
Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Nov-20*

Source: RBI
Note: * Growth over September 2020

1.32 On the non-bank financing side, assets under management (AUM) of mutual funds grew
at 17.73 per cent during April to November 2020. These funds faced aggressive redemption
pressures during the first quarter of the year amid liquidity crunch in debt markets. However,
RBI’s special liquidity window for mutual funds helped them to tide over this difficult period.
RBI’s liquidity enhancing measures also boosted Commercial Paper (CP) issuances and eased
spreads. In December 2020, CP issuances rose by 55 per cent to reach `1.88 lakh crore as
compared to ` 1.21 lakh crore in November 2020. The effective Weighted Average Yield of
CPs continued to ease to reach 3.6 per cent in December 2020. The mutual fund holdings of
NBFCs, after declining substantially post the IL&FS episode, increased by around 40 per cent
in November 2020 from its March 2020 levels.
1.33 The fiscal arithmetic was impacted by the adverse impact on government revenues and