Banks’ non-food credit grew 16.3% year-on-year (YoY) to Rs 143.63 trillion as of June-end, higher than 15.6% growth registered during May, sectoral credit deployment data released by the Reserve Bank of India (RBI) on Monday showed.
Credit to agriculture and allied sectors rose 20% YoY to Rs 17.96 trillion while credit to industries rose 8.1% YoY to Rs 34.24 trillion. Credit to services sector rose 27% YoY to Rs 38.85 trillion.
Among the services sector, credit to non-banking finance companies grew a whopping 35% YoY to Rs 14.24 trillion while personal loans grew 21% YoY to Rs 42.60 trillion.
The credit growth in June is in-line with analyst estimates. According to a report by CareEdge Ratings, credit growth is likely to be in the range of 13%-13.5% for FY24, excluding the impact of the merger of HDFC with HDFC Bank. If the merger is included, the growth rate is expected to be higher by approximately 3%, it said.
Further, the personal loan segment is expected to perform well compared with the industry and service segments in FY24. However, elevated interest rates and global uncertainties could potentially impact credit growth in India. Moreover, a reduction in inflation could also lead to decreased working capital demand, it added.
While credit grew 16% in May, the weighted average lending rate (WALR) on fresh rupee loans of banks decreased by 7 basis points (bps) from 9.27% in May to 9.20% in June, according to a separate release by the central bank. The WALR on outstanding rupee loans of SCBs increased by 4 bps on month to 9.82% in June, it said. Further, the one-year median marginal cost of fund based lending Rate (MCLR) of banks decreased from 8.65% in June 2023 to 8.63% in July 2023, the RBI said.
