In December, banks' retail loans grew at a pace of 13.7% year-on-year, slower than the 16.3% clocked a month ago, data from Reserve Bank of India show. The slowdown was on account of a sharp contraction in loans for the purchases of consumer durables. Such loans contracted by a whopping 36% year-on-year in December compared with a contraction of 7.8% in November and a growth of 28% in December 2011.
Consumers are cutting down on discretionary spending as confidence levels have reduced, according to a Credit Suisse report.
RBI, too, in third quarter policy review said consumption is decelerating in the economy. Within retail loan, home and auto loans continue to grow at a faster pace. Home loan grew 12.5% and auto loan expanded 22.2% in December.
Credit card outstandings also continued to grow at a faster pace of over 25%.
Meanwhile, credit growth to the industry decelerated to 13.8% year-on-year led by slowing of credit to mid-sized companies. Loans to shipping companies contracted by 20% and those to professional services by 5%.