<div>Stating that the current economic scenario is similar to 1991-92 crisis, foreign brokerage Barclays today said credit growth of banks will slow down to 10-11 per cent levels, just like it did during the crisis in early 90s. <br /><br />"The current macro context and consequently the monetary policy challenges are similar to those in FY1992," it said in a note. <br /><br />Barclays drew a slew of parallels between the ongoing economic scenario and the one during the dark period of 1991-92, like a sharp GDP slowdown, strained external account and sticky inflation. <br /><br />It can be noted that growth has fallen to a decade low of 5 per cent in FY13, the current account deficit is at a record high of 4.8 per cent, while the headline inflation also surged to 5.79 per cent due to the rupee depreciation, after showing ebbing for three months. <br /><br />Top economic policymakers, including Prime Minister Manmohan Singh, who ushered in the reforms in 1991 as a result of the crisis, have been repeatedly asserting that the scenario at present is not the same as 1991. <br /><br />It added that in 1991-92, capital spending and credit growth were weak, and hence, going to the bond markets was an unattractive option for banks. <br /><br />"If the FY92 scenario is repeated, credit growth could drop to 10-11 per cent," it said, conceding that this is contrary to the current focus on credit growth getting constrained because of weak deposit growth. <br /><br />Barclays said given their inflexible cost structures, public sector banks would get impacted because of this while others like Yes Bank and Indusind Bank, which are witnessing a string of growth in operating expenses because of network investments will also be hit. <br /><br />"A prolonged slowdown in credit growth would put pressure on the cost to income ratios of banks that have an inflexible cost base," it said.<br /><br />(PTI)</div>