Credit Growth Brings Relief To Economists And Smes

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Economists, who had earlier expressed scepticism regarding the onset of industrial recovery process, can now put their doubts to rest. The surge in non-food (commercial) credit as well as the export growth recorded for three successive months from November 2009 to January 2010 has come as a confirmation of the fact that business growth for India Inc has picked up momentum.

Increase in credit demand and surge in export figures have not only provided assurance to analysts, who questioned the sustainability of the economic uptick, but have also given the SME sector in India a reason to rejoice.

Things looking up

According to data released by the Reserve bank of India (RBI), the total credit growth, including food credit for the fortnight that ended on January 29, 2010 stood at 14.83%,as compared to 13.88% growth reported for the earlier fortnight that ended on January 15, 2010.

The growth in credit offtake is not only an indication of the improving demand for loans by key sectors, but also of the rising confidence of the business community, including that of SMEs, said A Chandak, senior analyst at East India Securities, a trading house and an equity firm in Kolkata

Bank lending to companies and individuals has also recorded impressive growth of 15.2% in the fortnight that ended on January 29, 2010 over the 14.4% growth recorded in the earlier fortnight.

A sustainable upward growth movement recorded by key sectors such as infrastructure, export, cement, steel and automobiles is encouraging companies, including SMEs engaged in these industries, to commence their stalled operations and enhance capacity. For this, many are approaching banks for credit, thereby resulting in enhanced demand for loans, said Avinash Jajoo, director of Tax Consultants, a small-sized tax and investment advisory firm in Mumbai.

Furthermore, increasing demand for bank credit from various key sectors is making economists and bankers hopeful that the target as set by RBI to achieve 16% credit growth for 2009-10 can be achieved.


About the Author:
David Parks is a well known author and has written articles on Jewellery Manufacturers and B2B Portal in India, suppliers, Manufactures and many other subjects.



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