Banks’ personal loans growth moderated to 17.7 % year-on-year in March 2024 from 21% a year earlier, mainly driven by slower growth in vehicle loans and unsecured loans, according to the Reserve Bank of India’s (RBI) data. Credit growth to non-banking financial companies (NBFCs) slowed to 15.3% y-o-y in March 2024, against 29.9% a year ago.
Concerned about the sharp rise in personal loans, RBI had decided to increase risk weights on unsecured loans in November last year when it directed banks and non-banking financial companies (NBFCs) to reserve more capital for risk weights. The mandatory risk weight requirement was increased by 25 percentage points and is applicable to unsecured personal loans, credit cards and lending to NBFCs.
Non-food bank credit registered a growth of 16.3 % during the month compared with 15.4% a year ago, according to RBI’s sectoral deployment of bank credit data. Credit growth to services sector improved to 20.2% in March 2024 from 19.6 % a year ago, with higher growth in credit to ‘transport operators’ and ‘commercial real estate’. Banks’ credit growth to agriculture and allied activities was came 20.1 % (y-o-y) in March 2024 compared to 15.4% a year ago. Credit to industry grew by 8.5 % (y-o-y) in March 2024 compared with 5.6 % in March 2023.
