New data from the Reserve Bank of India shows a 20% surge in industrial credit, suggesting that the Indian corporate sector is expanding despite global economic headwinds.
Data released this week indicates that bank credit to the industrial sector in India grew by 20% in July. This growth is particularly notable as it spans both large-scale manufacturing and micro-enterprises.
Credit growth is a leading indicator of economic activity. When banks are lending aggressively to industry, it suggests that companies are confident enough to invest in capital expenditure and expansion projects.
Unlike previous cycles, this credit expansion is supported by the strongest banking balance sheets in a decade. Gross non-performing assets (NPAs) are at historic lows, meaning the risk of a systemic banking crisis remains contained.
Beyond manufacturing, the services sector saw a 22.9% increase in credit, driven largely by financial services and trade. This diversification suggests that the growth is broad-based rather than reliant on a single industry.