Growth in bank loans to individuals was 14.1% year-on-year (y-o-y) in June, slower than the 18.5% recorded in June 2016, data released by the Reserve Bank of India showed. Outstanding retail loans as on June 23 stood at Rs 16.4 lakh crore. Loans to individuals had been clocking growth figures in the mid- to-late teens since May 2015 before signs of a slowdown began to surface in November 2016. In June, outstanding on credit cards grew the most — 33.4% — among all categories of loans to individuals. Housing loans grew 11.4%, as compared to 18.4% in the year-ago period. Vehicle loans grew 9.7%, lower than 20.7% in June 2016, while consumer-durable loans dropped 7.7%, as buyers put purchases on hold ahead of the roll-out of the goods and services tax (GST).
Credit to industry contracted on a y-o-y basis for the ninth straight month in June, falling 1.1% to Rs 26.18 lakh crore. In June 2016, the corresponding figure stood at Rs 26.47 lakh crore, up nearly 0.6% over June 2015. Industrial credit has been falling almost consistently since August, recovering briefly to clock a 0.9% growth in September. Credit deployment in industry fell 8.1% in the medium segment and 1% in large industry.
Loans to micro and small industries just about recorded growth, rising 0.5%. Bank credit to industry has been muted for the last couple of years as lenders turned cautious amid worsening asset quality and well-rated corporates chose to raise money from the bond market. Loan growth in the days ahead is expected to be driven by the retail category. Some banks have consciously decided to reduce exposure to some stressed industrial sectors. Last week, Chanda Kochhar, MD and chief executive officer at ICICI Bank, said: “The SME (small and medium enterprise) business has grown by 18.5% (y-o-y in the June quarter) and in the domestic book, we have actually grown the desirable portion, but we have also reduced the portion that was either NPA or stressed or so on.”