EditorialSanctum

Banks flush with money, but cos in no shape to borrow

“Demonetisation has made banks flush with funds, and they will lend it to productive sectors.” – Power Minister Piyush Goyal, November 26, 2016. It won’t be quite as easy as Goyal said. Rising non-performing assets and sluggish economic growth sparked a 60 per cent decline in corporate borrowing over the last six years, according to an IndiaSpend analysis of RBI data, inhibiting the anticipated lending bonanza to companies from banks after demonetisation. Now, after the government scrapped 86 per cent of India’s bank notes, by value, there are growing indicators of a further slowing. Automobile companies are witnessing the sharpest fall in deliveries to dealers in 16 years, the Times of India reported; home sales have hit a six-year low, NDTV Profit reported; and bank credit to infrastructure companies declined steadily over the first eight months of 2016-17 and contracted 6.7 per cent in November, the Indian Express reported, quoting RBI data released on January 10, 2017. So, the Rs 12.44 lakh crore that has now returned to the banking system may be difficult to lend to the corporate sector.

Leave a Reply

comments

Tags

Related Articles

Check Also

Close
error: