Financial Institutions disbursements up 17.2% - Views on News from Equitymaster

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Financial Institutions disbursements up 17.2%

Mar 8, 2000

For the first nine months of FY2000 disbursements of all India financial institutions have recorded a 17.2% growth amounting to Rs 426.9 bn and sanctions for the same period are up 15.6% amounting to Rs 720.3 bn. In comparison disbursements for the first nine months of FY99 went up by 12.5%, and sanctions for the same period went up by 36.9%. Hence for the first nine months of FY2000, disbursements have shown a much better growth. This can be attributed to a pick up in the economy, political stability and overall improvement in the industrial scenario.

However the sectoral break up and the states from which these disbursements came from during this period is not clear.

In FY99 the bulk of FI's sanctions was claimed by the private sector at 77.3%, followed by the public sector at 19.6% and the remaining being contributed by the joint and co-operative sectors.

The infrastructure sector which comprises electricity generation, telecommunications, roads, ports, bridges have accounted for the largest share of 29% in sanctions in FY99. The other industries which accounted for a major chunk of the sanctions in FY99 were services 11.5%, refineries and oil exploration 9%, chemicals and chemical products 7%, basic metals 6.4%, textiles 6.2% and electrical and electronic equipment (4.1%).

The main bulk of infrastructure sanctions was contributed to by power generation due to the infrastructure status they received in the last year. Textiles and steel did not account for a large share in sanctions for FY99 shows that FI's have decided to reduce their exposure to these industries as they are not performing well. FI's NPAs in the last couple of years have risen mainly due to the fact that these two industries formed a major portion of total industry exposure as these were badly hit by the economic slowdown.

Among the states the highest share was of Maharashtra (28.7%), followed by Gujarat (11.9%), Tamil Nadu (11%), Andhra Pradesh (7%), Delhi (6.4%), Karnataka (6.3%), Uttar Pradesh (4.6%) and West Bengal (4.2%).

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