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170 hotspots account for 80% of outstanding bank credit: RBI data

Coronavirus (COVID-19): Mapping the 170 districts designated as Covid-19 hotspots with the Reserve Bank of India disaggregated data on credit reveals that these districts (about 24 per cent of all districts) account for almost 80 per cent of the total credit outstanding of scheduled commercial banks.

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According to experts, despite the government's fresh guidelines that selectively lift restrictions on economic activities from April 20, business is likely to stay crippled because of the high impact of the pandemic in these 170 districts. The government will have to hence extend greater support across sectors and plan more specific interventions to rekindle economic activity, they say.

Data available with the RBI and compiled by The Indian Express shows that the 170 districts that have witnessed large outbreaks (as on April 15) had a total credit outstanding of Rs 79.84 lakh crore, which accounted for 79.3 per cent of the total credit outstanding of Rs 100.68 lakh crore reported by the scheduled commercial banks as of December 2019.

Important districts that have been impacted and categorised as hotspot include Mumbai, 10 of the 11 districts of Delhi, Mumbai Suburban, Bengaluru (U), Chennai, Hyderabad, Kolkata, Ahmedabad, Pune, Jaipur and Gurgaon among others. The top 10 districts alone account for Rs 53.2 lakh crore of credit outstanding or around 53 per cent of the total outstanding of SCBs.

It needs to be noted though that many companies though headquartered in large cities, have their businesses spread across other different regions. So, while the credit outstanding data is attributed to major urban centres, the investments might actually be beyond this catchment area.

Economists say since business activity in districts categorised as hotspots is likely to remain subdued, the impact on the economy will be severe. "If 80 per cent of the credit outstanding is impacted, it means the entire economy is impacted. This data reflects that companies across all sectors and scale have been impacted," said DK Pant, Chief Economist, India Ratings. As banks have concentrated exposure in these zones, this also raises concern on bank NPAs since businesses operating in these areas will find it tough repay loans.

Mahesh Vyas, CEO, CMIE said while it was natural and expected that the danger would be more in congested urban areas with bulk of economic activity, it is important now to focus on smaller zones in these areas and work on containment there.

"One way of looking is that since the districts having large proportion of credit outstanding are worst affected and the economic activity there is impacted, it will lead to higher NPAs for banks going forward. The other way to look at it is that we now need to focus on these areas and if we allow things to fester, it will take longer to come out of it. We need to go for containment in smaller areas in these zones," said Vyas.

Pant said while companies of large, medium and small scale are getting impacted, the large ones are in a better position to survive and come out of the current pain. "I think government intervention will be required for companies across sectors. MSMEs which are the backbone of the economy will need more support," said Pant.

The head of a mutual fund, however, said the data may be misleading to some extent as many companies have only their headquarters in large cities, and so not all the credit outstanding will come under stress.

(Inputs and image from

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