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Rise in rural credit growth seen by banks

Rise in rural credit growth seen by banks

02:43 PM

Rural Credit Growth

An upsurge in the credit growth is being seen by banks in rural areas, while they have been reducing the advances in both semi-urban as well as urban areas.

As per data by RBI, rural credit by scheduled commercial banks has increased by a whopping 13.2% as on Dec 2018 which was higher than last year’s 11.5%. Due to this, the total bank credit has been pushed to 12.9% against 10.7% last year.

On the other hand, as far loan disbursals in semi-urban and urban areas is concerned, banks are going slow. In fact, there has been a very steep fall in terms of credit growth in these areas during the end of the third quarter in comparison to last year.

As per figures, credit growth in urban areas reduced to 12.9 per cent from a good 17.6 per cent. On the other hand, semi-urban credit growth fell from 18.9% to a mere 12.3%. Metropolitan areas have seen credit growth jump from 7.7% to a good 13%.

If individual data of banks is seen, agricultural credit, micro, small and medium enterprises loans and retail loans in rural areas, are responsible for the growth in rural lending.

Few banks have been making a clear effort to tap rural loans in agriculture. PNB has started initiatives like online loan application and automation facility for agri and allied activities, the bank has also set 16 specialized cells which are focused on agriculture.

As per the RBI, the agrarian economy of India is responsible for not just about 15 per cent of GDP, but also some 11 per cent of exports and is the reason why half of Indian population is employed.

Image Credit: The Conversation