The share of personal loans in total non-food credit touched an all-time high of 30% in FY23, in keeping with the trend seen in recent years.
For three years in a row, personal loans segment has been the largest component of bank credit, overtaking industrial credit, which was the undisputed leader for decades.
Following the subdued growth in industrial credit offtake for sometime now, even the services sector has now overtaken the former to emerge as the second largest component of bank credit in FY23.
According to data released by the RBI's Handbook of Statistics on the Indian Economy 2022-23 on Friday, total non-food credit outstanding at the end of FY23 stood at Rs 136 lakh crore as against Rs 118 lakh crore in March 2022.
Within this, the share of loans to the industrial sector fell to 24.4% from from 26.6% a year earlier.
Personal loans outstanding, at Rs 40 lakh crore, saw its share increase to 30% from 28.% in FY22. Services sector share too shot up to 26.4% in FY23 from 25.4% in FY22. While agriculture and allied sectors' share stood pat at 12.3%, priority sector lending accounted for the rest at 6.8%.
The numbers indicate that banks' efforts to increase their retail focus have paid off, as loans to industries began shrinking over the past few years.
Led by credit cards outstanding, housing loans and others, the personal loans segment registered growth of 20.6% in FY23 over the previous year, followed by services sector, which grew by 20%, and industrial credit, which saw a dismal growth of 5.7%.
Within personal loans, credit card outstanding saw the highest growth of 31%, followed by vehicle loans at 25%, loans against gold jewellery at 20%. The housing loan portfolio of banks, the largest component within personal loans, saw a growth of 15%, and stood at Rs 19 lakh crore in FY23. Interestingly, housing loan portfolio is now bigger than banks' agriculture and allied sector loan book, which stood at roughly Rs 17 lakh crore.
Meanwhile, even the modest growth in industrial credit was largely owed to the far-from-robust growth of demand from large borrowers.
Despite a decline in bad loans and deleveraging witnessed during the past few years, large borrowers continue to seek fewer loans. Large industries that comprise an 18.1% share of total non-food credit in FY23 saw a pale growth of 3.6%, while micro and medium industries registered a growth of 12.4% and 1.8% growth respectively.
Within the industrial sector, the infrastructure sector -- that accounts for a lion's share of 30% -- barely grew by 0.6%. Among various infrastructure companies, power sector, the largest sub-component, saw flat growth of 1.5% at Rs 6.2 lakh crore. Telecom, one of the biggest borrowers, saw degrowth of 14%, followed by textiles and construction sector too saw a moderate growth of 1.7% and 4.4% respectively.