Improved economic environment in 2HFY21 and the Centre’s focus on higher spending especially on infrastructure will give a boost to FY21 credit growth, India Ratings and Research (Ind-Ra) said.
The agency’s February 2021 edition of its credit market tracker showed an upgrade to its FY21 credit growth estimates to 6.9 per cent from 1.8 per cent.
Accordingly, the agency said that amid the pandemic, the credit offtake in the banking system has remained muted, which led to lesser issuances of certificates of deposits (CDs).
“The CD issuances for January 2021 increased for public sector banks, whereas that for private banks have remained muted. Concurrently, the CD yield across maturities was confined to a narrow range, amid subdued issuances. Similarly, the issuances of commercial paper (CP) by corporates have fallen, due to a lesser requirement amid fewer rollovers.
“The CP yields however have largely seen an upward revision, owing to the Reserve Bank of India’s announcement of the restoration of liquidity management operations.”
Besides, demand from fund houses for corporate bonds and short-term funds has increased by “Rs 52 billion and Rs 10 billion, respectively”.
On the other hand, the agency said that CP issuances by non-banking financial companies and housing finance companies have remained encouraging, both in terms of total amount and volumes.
