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We are positive on the banking sector’s credit growth recovery going ahead.
From a low of 5.6% YoY in October 2020, credit growth has recovered to 6% and is expected to improve further as the functioning of the economy normalizes.
While the retail sector growth has been strong (up 9.5% YoY in December-20) vis-a-vis other sub-segments, industry credit growth has been lacklustre (down 1.2% YoY in Dec-20).
The sequential (month-on-month) industry credit build-up has been negligibly positive (up 0.3-0.5% month-on-month).
Though we are incapable of putting an exact timeline as to when the corporate credit growth will revive to more meaningful levels, we do believe that it has (or nearly) bottomed out.
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