MUMBAI: The Reserve Bank clamp down on unsecured loans in November last year have finally began to show result as credit growth of banks’ have fallen by nearly 600 bps to 13.7% in July from 19.5% in the same month last year tempered down by their personal and agriculture portfolios.
On the other hand, industrial credit demand almost doubled to 10.1% from 5.2%.
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 sometime now.
Care Rating forecast a moderation in overall credit offtake this fiscal, led by continued temperance in unsecured retail and slower corporate loans.
Credit growth fell nearly 600 basis points in July year-on-year, dragged down by the slowdown in personal, agriculture and micro, small and medium enterprises portfolios. It added that bank lending fell to 13.7% in July from 19.5% in July 2023.
Except for corporate lending, all other major sectors saw a slowdown in the reporting month. While personal loans growth came down to 14.4% from 31.2% in the month, vehicle loans slowed down, but was partially offset by a rise in gold loans.
Similarly, agriculture loans slowed to 4.1% from 5.8%, primarily because of seasonalities. The services segment witnessed credit demand falling to 14% from 23.4%, mainly on account of reduced credit expansion in the non-banking financial companies and trade sectors which was partially offset by a rise in commercial real estate.
On the other hand, the industrial segment saw credit growth almost doubling to 10.1% from 5.2%.