The Reserve Bank of India (RBI) , in its Macroeconomic and Monetary Developments in 2009-10 released on Monday, has pointed out that credit to real estate decelerated sharply during the period mainly on account of the definitional change to the concept of ?lending to real estate sector? effected in September 2009.
Within personal loans, while education loan and housing loan continued to grow over 30% and 8%, respectively, the contraction in credit to some sub-sectors such as consumer durables and advances against shares, bonds, among others, moderated. Share of personal loans in incremental non-food credit increased markedly to 6.5% by February 2010, from (-) 0.2 % in October 2009.
Due to the revival in credit demand for the banking system as a whole, the credit extended by private banks at the end of March 2010 showed some improvement over last year. The loan portfolio of foreign banks, however, contracted.
The agricultural sector absorbed 18.3% of the incremental non-food bank credit in February 2010 (12.7% last year). Disaggregated data on sectoral deployment of gross bank credit show improvement in credit growth (y-o-y) to all major sectors such as agriculture, industry, services and personal loans from November 2009 onwards. Industry absorbed 52.6 % of incremental non-food credit (y-o- y) in February 2010 as compared with 55.8 % in the corresponding month of the previous year, said the report. This expansion was led by infrastructure and basic metals and metal products. The share of incremental non-food credit to services sector was 22.6 % in February 2010.
Within services sector, credit growth (y-o-y) for transport operators, computer software, tourism, hotels and restaurants and trade accelerated in February. Also, the share of incremental nonfood credit to micro and small enterprises (industry as well as services) was up to 16.4 % in February 2010 as compared with 12.4 % in February 2009.