Commercial credit supply drops 11 pc in Q4 over asset quality concerns: Sidbi-Cibil report

Mumbai, May 22 (PTI) Asset quality concerns stemming from external headwinds weighed on lending to businesses during the March quarter, leading to a drop in credit supply, a report said on Thursday.

Commercial credit supply dropped 11 per cent year-on-year during the January-March period, despite a growth in credit enquiries, a report by the state-run Small Industries Development Bank of India and the credit information company Transunion Cibil said.

"There was an 11 per cent year-over-year decline (in commercial credit supply), possibly due to higher credit concerns among lenders arising from increased external headwinds," the report said.

This drop restricted the overall commercial credit supply growth to just 3 per cent, it said.

It can be noted that since the inauguration of the Trump presidency in January, there have been a spate of changes to US trade policies which have led to concerns and speculations on their impact across the world.

Cibil's Managing Director and Chief Executive Bhavesh Jain said it is important for small businesses to get access to formal credit and guidance in debt management for sustainable growth.

The report said measured by the number of enquiries, the demand for commercial loans witnessed an 11 per cent growth in Q4.

The portfolio outstanding stood at Rs 35.2 lakh crore on March 31, recording a 13 per cent growth over the year-ago period.

From an asset quality perspective, stress declined to a five-year low with proportion of loans unpaid for over 90 days following declining 0.35 per cent to 1.79 per cent.

The top five states of Maharashtra, Gujarat, Tamil Nadu, Uttar Pradesh and Delhi contribute to nearly half of the commercial credit origination by value, it said.

While the manufacturing sector has the highest share in origination by value in Maharashtra, Gujarat, Tamil Nadu, and Delhi, the state of Uttar Pradesh has the maximum originations by value in the trade sector, it said. PTI AA TRB