MUMBAI: The RBI's clampdown on unsecured loans last November has finally begun to show results as the credit growth of banks has fallen by almost 600 bps to 13.7 percent in July from 19.5 percent in the same month last year due to a slowdown in their personal and agriculture portfolios.
On the other hand, industrial credit demand almost doubled to 10.1 percent from 5.2 percent.
Another reason for the steep deceleration is that lenders are increasingly focusing on managing their skewed credit-deposit (CD) ratio as deposits have been flying out of their vaults for quite some time now.
This has Care Rating forecasting a moderation in overall credit offtake this fiscal led by continued temperance in unsecured retail and slower corporate loans.
Credit growth was dragged down by the slowdown in the personal, agriculture and micro, small and medium enterprises portfolios, Care Ratings said in a recent report.
Except for corporate lending, all other major sectors saw a slowdown in the reporting month. While personal loans growth came down to 14.4 percent from 31.2 percent in the month, vehicle loans also slowed down, but was partially offset by an increase in gold loans.
Similarly, agriculture loans slowed to 4.1 percent from 5.8 percent, primarily due to seasonalities. The services segment saw credit demand falling to 14 percent from 23.4 percent mainly due to reduced credit expansion in the non-banking financial companies and trade sectors which was partially offset by a rise in commercial real estate.