External Headwinds Squeeze Commercial Credit: A Deep Dive into Asset Quality Trends
Credit supply to businesses dropped by 11% in the March quarter, hindered by asset quality concerns due to external challenges. Despite a rise in credit enquiries, reports indicate restricted growth. Major states contribute significantly to commercial credit origination, amidst a steady decline in stress on asset quality.
- Country:
- India
Asset quality issues, exacerbated by external headwinds, led to a significant reduction in lending to businesses during the March quarter, as highlighted by a recent report released on Thursday.
The report, collaboratively published by the Small Industries Development Bank of India and Transunion Cibil, noted an 11% year-on-year decrease in commercial credit supply during January-March, alongside a 13% rise in demand for loans based on credit enquiries.
There's growing concern within financial circles due to changes in US trade policies initiated by the Trump administration, which have raised worldwide speculation. The report emphasizes the pivotal role of major Indian states in credit origination and highlights a noteworthy decline in loan stress levels to a five-year low.
(With inputs from agencies.)
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