Retail loan growth slows to 16.6% in June: RBI

Personal loan growth slowed to 16.6% year-on-year (YoY) in June 2024, down from 21.3% in June 2023, according to the data released by the Reserve Bank of India (RBI). This dip was mainly driven by a slowdown in the growth of 'other personal loans' and 'advances against fixed deposits'.

The RBI notes that non-food credit increased by 13.9% in June 2024, down from 16.3% in June 2023, due to an unfavourable base effect. Credit to the industry increased slightly to 7.7% YoY in June 2024, up from 7.4% YoY in the previous year, with credit to large industries rising to 6.9% from 5.4%. 

“Among major industries, while y-o-y growth in credit to ‘chemicals and chemical products’, ‘food processing’ and ‘infrastructure’ was higher in June 2024, credit growth to ‘basic metal and metal product’, ‘petroleum, coal products and nuclear fuels’ and ‘textiles’ moderated,” the apex bank states.

Data on the sectoral allocation of bank credit for June 2024 was gathered from 41 selected scheduled commercial banks, which represent around 95% of the total non-food credit extended by all scheduled commercial banks, it adds.

The growth in other personal loans plummeted to 13.2% year-on-year (YoY) in June 2024 from 28.4% YoY in June 2023. In contrast, the housing loan segment, the largest part of retail loans, witnessed a growth of 18.2% YoY, up from 14.8% YoY. These figures exclude the effects of the merger between HDFC and HDFC Bank.

Credit growth to the services sector slowed to 15.1% YoY in June 2024 from 26.8% in June 2023. This was mainly due to reduced credit growth in non-banking financial companies (NBFCs) and the trade segment. Credit to NBFCs grew by only 8.5% YoY in June 2024, a sharp decline from 34.7% YoY a year earlier. Credit to trade decreased to 14.8% YoY in June 2024 from 18.5% YoY in June 2023.

Credit growth to agriculture and allied activities remained strong at 17.4% YoY in June 2024, although this was lower than the 19.7% YoY growth recorded in June 2023.