Credit demand from private corporate houses for investment is expected to take longer because of low capacity utilisation in the wake of the Covid pandemic and lockdown affecting business. But working capital requirements could recover sooner, according to SBI chairman Dinesh Khara.

Corporate credit demand did not rise in September 2020 compared with a 2.7 per cent growth rate in September 2019, according to RBI data.

Speaking at the annual general meeting of the Bengal Chamber of Commerce and Industry on Saturday, Khara said when a credit recovery cycle starts, borrowings in personal accounts tend to go up first.

“We are almost back to our pre-Covid number when it comes to retail lending. Similar trends are seen across other banks also,” he said.

Corporate credit is a function of both capacity utilisation and demand on ground. With growth in individual demand reflected in the rising e-commerce sales volume, inventory levels of firms are coming down.

“Perhaps firms will start utilising their working capital limits,” Khara said. But for lenders credit demand will take longer to come in, especially from private corporates.

“Capacity utilisation in the economy stands at around 69 per cent, so investment demand from the private corporate looks quite unlikely for some more time to come. I feel the cash rich public sector entities also would probably embark on their capital expenditure plan. That will be the first lever that will generate investment demand. We are seeing enquiries for brownfield capacities awaiting resolution in NCLT,” he said.

The SBI chairman also said that corporates unlike past instances, have become more responsible in leveraging.

“In the last couple of years, we have seen people can lose control of their enterprises. That has led to a situation where borrowers have become quite conscious. At a personal level also people are quite mindful about their bureau scores,” he said.