(MENAFN- KNN India) World Bank report stresses on reviving of bank credit to support growth
New Delhi, Mar 21 (KNN) Amongst the brouhaha over the comments of a recent world bank report on the implementation of GST and Demonetisation, the core focus of the report has been lost.
The report titled as the India Development Update released by the world bank only last week, singularly focus on enhancing the growth rate of India to 8% level towards making a ‘middle income country'.
Towards this end the report analyses the performance of Indian economy during the last 50 years and identifies achievements and pitfalls in the policy measures taken during this period.
The report mentions that to upscale the Indian growth rate reviving of bank credit is critically important.
The high growth period of Indian economy during 2004 2008 is also the period of high credit growth, mentions the report and there may be a close relationship between the two.
The report also shows that credit release by the Indian banks is going down over the last decade and the drop in credit release is the highest for Industries.
And since 2017 the credit growth rate for Indian MSMEs is in the negative zone, that is the actual amount of outstanding credit has shrunk.
And the reasons are not far to find out.
The high NPA stress is forcing the Banks to the recovery mode and enforcement of unimaginative SMA criteria is squeezing money out of the MSMEs.
Interestingly, while the Banks take MSME accounts as ‘high risks', the world bank report project a different story.
Large borrowers accounted for about 56 percent of advances, but 83 percent of GNPAs.
The report also stresses that ‘decisive reforms will be needed to enable the Indian banking sector to help finance India's growth aspirations'.
It also mentions that the allocative and operational efficiency of the public-sector dominated Indian banking sector is considered to be low across sectors and regions. (KNN/DB)
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