Businesses busy borrowing!

Monday, 28 March 2011 00:33 - - {{hitsCtrl.values.hits}}

The banking sector has begun the New Year with only private sector increasing borrowing with their cumulative figure topping the Rs. 1.5 trillion mark whilst that from two other key segments contracting in January.

Credit to private sector had grown by Rs. 36.2 billion or 2.4% in January 2011, more or less the same as 2.3% rise in December 2010.

On the other hand net credit to Government in the first month of this year was down by 3.7% or Rs. 22.6 billion as against a 11% growth of Rs. 62.8 billion in December 2010. Credit to corporations was down by 5.5% or Rs. 7.8 billion. This segment of the credit market saw a growth of 3.7% or Rs. 5.1 billion growth in December 2010.

The dip in credit to Government and corporations in January this year is against strong growth in January 2010. On the other hand credit to private sector a year ago was almost static.

A redeeming feature however is the robust 28% annual growth in credit to private sector with the cumulative figure topping the Rs. 1.5 trillion mark to finish at Rs. 1,530 billion in January 2011, as against Rs. 1,494 billion in December 2010. A year earlier i.e. in January 2010 private sector credit was languishing with a negative 4.6% growth.

Despite the dip in January, credit to corporations is boasting an annual growth of 75%. This however is lower in comparison to 93% annual growth in December but higher as against a 42% growth a year ago.

Annual change of net credit to the Government was a negative 8.1% in January 2011, as against negative 2.1% in December and positive 3.3% a year ago. Whilst domestic banking units continue to see negative growth in credit to Government, annual change down by 12.6% to a cumulative Rs. 380.5 billion (as against 54.7% annual growth to Rs. 435.2 billion a year earlier), the Foreign Currency Banking Units are having brisk business with the Government with its credit up by 10.7% to Rs. 132.6 billion as at end 2011 January, 4.7% in December and 7.8% to Rs. 119.8 billion a year ago.

Domestic banking units lending to private sector was up 30% to Rs. 1.36 trillion by January 2011 as against Rs. 1.04 trillion a year earlier whilst foreign currency banking units had lent Rs. 165.7 billion, as against Rs. 146.1 billion as at end January last year.