Private sector banks record faster credit growth

The share of personal loans in bank credit has successively increased to over 30 per cent from 22 per cent share five years ago

FinTech BizNews Service

Mumbai, December 2, 2023: The Reserve Bank released its web publication entitled ‘Quarterly Basic Statistical Returns (BSR)-1: Outstanding Credit of Scheduled Commercial Banks (SCBs) - September 2023’ on its Database on Indian Economy (DBIE) portal¹ (web-link: https://dbieold.rbi.org.in/DBIE/dbie.rbi?site=BsrPublications#!12). It captures various characteristics of bank credit such as occupation/activity and organisational sector of the borrower, type of account and interest rates based on account-level reporting². Data reported by 90 SCBs (excluding Regional Rural Banks) are presented for bank groups, population groups and states³.

Highlights:

• Bank credit growth (y-o-y) decelerated to 15.7 per cent, net of merger, in September 2023 (19.8 per cent, including the merger impact) from 18.0 per cent a year ago; rural and semi-urban branches of banks have, however, recorded accelerated credit growth.
• Loans to industry accounted for nearly one fourth of total bank credit; they increased by 8.6 per cent (y-o-y) in September 2023 (12.3 per cent a year ago); working capital loans growth has remained in double digits for the last six quarters.
• Bank lending to private corporate sector recorded robust growth and accelerated to 14.9 per cent (y-o-y) in September 2023 from 11.5 per cent a quarter ago and 14.7 per cent a year ago.
• The share of personal loans in bank credit has successively increased to over 30 per cent from 22 per cent share five years ago.
• The share of female borrowers in total bank credit as well as in loans to individuals has been rising in the recent period.
• Private sector banks continued to record faster credit growth when compared to public sector banks.

Data on sectoral deployment of bank credit for the month of October 2023 have been collected from 41 select scheduled commercial banks, accounting for about 95 per cent of the total non-food credit deployed by all scheduled commercial banks.

On a year-on-year (y-o-y) basis, non-food bank credit² registered a growth of 15.3 per cent in October 2023³ as compared with 18.3 per cent a year ago.

Highlights of the sectoral deployment of bank credit³ are given below:

• Credit growth to agriculture and allied activities improved to 17.5 per cent (y-o-y) in October 2023 from 13.8 per cent a year ago.
• Credit to industry grew by 5.4 per cent (y-o-y) in October 2023 as compared with 13.5 per cent in October 2022. Among major industries, credit growth (y-o-y) to ‘basic metal & metal products’, ‘food processing’ and ‘textiles’ accelerated in October 2023 as compared with the corresponding month of the previous year, while that to ‘all engineering’, ‘chemicals and chemical products’ and ‘infrastructure’ decelerated.
• Credit to services sector grew by 20.1 per cent (y-o-y) in October 2023 as compared with 22.5 per cent a year ago with ‘non-banking financial companies (NBFCs)’ and ‘trade’ being the major contributors.

Personal loans growth decelerated to 18.0 per cent (y-o-y) in October 2023 (20.5 per cent a year ago), due to moderation in credit growth to housing.