There is a dire need to increase credit availability to the Indian industry, but the current scenario hardly offers much hope. Our public banks are saddled with mammoth non-performing assets, incidents of banking frauds are coming to light every next day, RBI is tightening the noose over the PSBs under its Prompt Corrective Action framework, and in such a situation lending to the corporate sector, particularly small and medium enterprises, is becoming increasingly difficult.

In an RTI reply, the central bank has recently revealed that total NPAs of Scheduled Commercial Banks stood at Rs 8.99 lakh crore as on December 31, 2017. Additionally, urban cooperative banks had NPAs worth Rs 21,297 crore on the same date. Needless to say, this is a mind boggling amount. According to a recent report by a rating agency, bank NPAs may further shoot up in the March quarter before beginning to gradually slide down thereafter, but still after that credit growth may not pick up due to ongoing frauds and allegations of banker-corporate nexus.

Now, let's have a look at a last week RBI report on Sectoral Deployment of Bank Credit for the month of March, 2018. It shows that in March, on a year-on-year basis, credit to non-food sector, agriculture and allied activities, industry and services sector increased by 8.4 percent, 3.8 percent, 0.7 percent and 13.8 percent, respectively. While these figures give a somewhat positive picture, a deeper look gives an opposite one, showing how sectors after sectors are still facing drop in deployment of bank credit.

The report shows a 15.5 percent drop in food credit, 2.7 percent fall in credit to the tourism, hotels & restaurants sector and a whopping 24.7 percent contraction in credit to shipping. Similarly, sectors like fertilizers (-8.6 percent), sugar (-11.5 percent), jute textiles (-4.6 percent), paper & paper products (-6.1 percent), petrochemicals (-23.7 percent), cement & cement products (-3.1 percent), basic metal & metal products (-1.2 percent) are still facing severe credit crunch. This situation demands prompt response.

I invite your opinions.