The Indian economy is facing a turbulent time as sectors from steel to auto to exports have all taken a hit. Just in the recent report, sales in the auto sector declined for the 11 consecutive months.
Construction and allied activities too have slowed down thereby pushing the steel sector into a slump.
Albeit from the government side both the RBI and the Finance Minister have taken steps to address this slowdown recovery yet seems distant.
As this drab in the Indian economy continues the state of Andhra Pradesh too has been affected with this slowdown in the economy. More so with industry contracting, demand for business lending has taken a nose dive.
‘Industry side demand is very low. Businesses are not coming to borrow’ said Mr Shailendra Singh, regional head, Bank of Baroda. The bank itself has seen fall in its lending (both Term loan and Working capital) since last year.
‘Even though we have seen a net growth of Rs 350 crs in lending (from April-Sept this year) we are down 50% from the same period last year i.e. from Rs 700 crores. We are ready to lend but there are little takers’ stated Mr Singh.
Agrees the zonal Manager of Andhra Bank Mr E Koti Reddy ‘There is no dearth of capital but businesses are shying away from taking credit’ he said.
Andhra Bank too has seen a fall in its lending business.
‘From March this year onwards we are down Rs 75 crores in terms of lending compared to the same period last year’ said the zonal manager Andhra Bank.
He opines that businesses have slowed down due to no new projects thereby significantly stalling demand for term loans.
One of the worst hit sectors has been the construction and realty sector. Non availability of sand, delay in payments etc have taken a toll on the sector.
‘Contractors receivables are stuck. We already have 1 NPA in solar due to the non receipt of payment from the state electricity department’ informed Mr Reddy.
Canara Bank Regional head Mr A Ramesh Babu echoed similar sentiments.
‘People who had taken money aren’t get paid and in some cases projects are getting cancelled thereby creating pressure/stress in their repayments. Availability of sand too is an issue’ said Mr Ramesh Babu of Canara Bank.
He goes on to add ‘If the current situation prolongs we might see NPAs go up’.
Even private sector banks are facing the same lacklustre demand from businesses.
‘Kotak as a bank is known to offer the best rates in the market however we too have nobody approaching us. Working capital has taken a dip since last year. Liquidity is not an issue demand is’ said Mr Chenjeri VVR Ch Muralidhar, Vice President & Area Business Manager, Kotak Mahindra Bank Ltd.
Bankers are hoping that the construction and realty sector see a quick turnaround so that growth and demand get a much needed impetus.