New Delhi, November 13: Amidst the ongoing economic slowdown, there is yet another shocker for the government— growth of credit expansion in India had slowed down to 6 per cent in the second quarter that ended on September 31. The Credit Suisse Report uncovers a persistent and prolonged slowdown the economy is going through.

In the July and September quarter, loan growth has fallen by 6 per cent. The report stated that the on Banking Financial Companies (NBFCs) witnessed a 36 per cent drop in disbursements while growth in bank lending slowed to 8 per cent at the end of September.

The numbers given in the reports are alluding to the lenders continuous reluctance to increase their exposure to NBFCs, post IL&FS failure and DHFL crisis that came into the fore last year. But the government has taken several measures in the past to ease the liquidity pressure in the sector through a series of stimulus measure.

The report also stated that slowdown in bank credit was due to both public and private sector banks. PSU bank witnessed a growth fall from 8-5 per cent year on year, while private sector bank growth was down from 22-14 per cent.

This slowdown was not only in the banks but its impact was seen in NBFCs and HFCs also whose growth reduced from 24-7 per cent. And overall loan growth fell year on year from over 11-6 per cent.

Credit Suisse’s report for the first quarter showed us that loan growth of non bank lenders continued to fall in the quarter ended June due to the liquidity crisis in the economy. That report said the growth of NBFCs continued to trend down and fresh disbursement remained in the negative. It contracted 17-18 per cent in three months ended June against about 5 per cent growth a year ago.

But one important thing this report underscored was the private sector banks who saw stable operational performance with healthy net interest income growth of 18 per cent year on year. However, the net profit was down by 3 per cent. In order to pull the economy out of the gloom, banks lending to NBFCs therefore, increased by 30 per cent year on year.