Mumbai: Incremental credit flow through banks, commercial papers (CP) and corporate bonds declined to ₹6 trillion in financial year 2020 from ₹16.79 trillion a year ago, rating agency Icra said on Tuesday.
This could rise by ₹7.3-9.7 trillion during FY2021, a growth of 22-61% over FY20, albeit on a low base, it said. Karthik Srinivasan, group head – financial sector ratings, Icra, said the sharp decline in incremental credit during FY20 was driven by slowing economic growth as well as heightened risk aversion among lenders. “Nonetheless, the expectations of increase in incremental credit flow during FY21 is driven by increased credit demand amid weakening cash flows of borrowers because of covid-19 induced stress; as well as capitalisation
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