Bank credit to private sector businesses has surely galloped in the first four months of current fiscal year. The net credit off take in 4MFY18 is about Rs23 billion as against a net retirement of Rs40 billion in the year-ago period. The credit for that credit off-take, however, goes to the textile sector.

But first thing first. Credit off take in the year to-date may be higher than last year, it is much lower than the pace seen in the preceding three years. Hold on to that thought!

Now consider that manufacturing sector - that has about 58 percent share in total outstanding private sector business loans in the country - saw a net retirement of Rs1.3 billion in 4MFY18 as against a net retirement of Rs69 billion in the same period last year. This was made possible by lower retirements by food & beverages sector this year (Rs41bn vs Rs70bn), and a whopping increase in borrowings by the textile sector (Rs58bn in 4MFY18 vs Rs21bn in 4MFY17).

Together, textile and food & beverages sectors enjoy 58 percent share in manufacturing sector loans. That explains why the picture of manufacturing loans is better this year than the last. The non-food, non-textile manufacturing businesses retired a net of Rs18 billion as against Rs21 billion in the year ago period - an improvement but a modest one given the scheme of things.

With cotton prices staying largely flat between this year's 4M period and the last, the rise in textile borrowings can be attributed to the textile package announced earlier this year. The same is visible in the cumulative monthly loan graph for the textile sector (notice that spike in October 2017).

In non-manufacturing businesses, real estate and commerce & trade have seen noticeable increases in comparison to last years' performance. But it is really the consumer financing that demands closer attention.

Loans for housebuilding have more than doubled year-on-year. 4MFY18 saw housebuilding loans grow by Rs7.8 billion on net basis - the highest 4M number since at least FY07. Likewise, although loans for transport dipped 6 percent year-on-year in 4MFY18, it is still one of the highest 4M-credit off take numbers in the last ten years. Interestingly, loans for consumer durables have also risen sharply to Rs1.4 billion in 4MFY18 - the highest 4M disbursement in the last ten years. Although consumer durable loans are a small ticket item, it is a good proxy of consumer sentiments. With interest rates seen bottoming out, the question is whether this credit growth is strong enough to continue. If the central bank's Bank Lending Survey (BLS) is any guide, the answer to that question is shaky.

The 1QFY18 bank lending survey based on feedback of 20 commercial bank officers suggests that overall demand for loans is expectedto increase in the ongoing quarter. However, compared to their previous survey in in 4QFY17, the numbers of bankers responding positive views about the credit conditions was about 10 points lower (on 100-point index) in the 1QFY18survey.

Whether BLS is good leading indicator or not; one will have to wait for a longer time series data before one can comment on it. But knowing that January onwards credit off-take doesn't usually take off, that this year's credit supply may not be better than the last.