After new loans totaled Rs.17.4 billion during the first two months of this year, private sector credit from domestic banks gained another Rs. 20.1 billion in March 2013, taking the total of new loans to Rs. 37.5 billion for the first quarter of 2013, latest data released by the Central Bank showed.
The government on the other hand, got new loans from the banking system to the tune of Rs. 45.4 billion in March, more than double of what the private sector received, taking the total up to Rs. 140.4 billion in new loans from the domestic banking system during the first quarter of 2013.
Public corporations borrowed Rs. 6.2 billion in March from the domestic banking system, taking the total of new loans during the first quarter to Rs. 10.1 billion.
The state has in effect borrowed Rs. 51.6 billion in total in March, and Rs. 150.5 billion during the first quarter from domestic banks.
In March the Central Bank also lent the government Rs. 20 billion, reversing two months of settlements after the government paid back Rs. 12.5 billion in January and Rs. 21.2 billion in February.
As far as growth rates go, net credit to the private sector from domestic banks grew 12 percent year-on-year, down from Rs. 14.2 percent a month earlier to Rs. 2,209.6 billion. Borrowings from foreign banks fell 1.5 percent to Rs. 186 billion.
The Central Bank has maintained that growing the per capita income of the country would require bank lending to the private sector to increase.
"Our aim is to increase the per capita income to to US$ 4,000 by 2014 and this would mean that total lending of the financial sector would have to be increase to almost Rs. 3.3 trillion," Cabraal said presenting the road map for the Central Bank’s monetary and fiscal policies for 2010 and Beyond in January that year.
In the same speech, Cabraal warned that the government should not engage in reckless spending and print money to bridge budget deficits as it would put pressure on capital available to the private sector. For the same reason, he also urged public corporations to seek funds from external markets.