A sustained demand for credit has pushed bank loans higher by 17.2% year-on-year (Y-o-Y) in November, the latest data released by the Reserve Bank of India (RBI) showed. Nevertheless, the Y-o-Y rise in loans during the month under review came a slightly lower than the near-18% Y-o-Y rise in October.
Outstanding bank credit stood at Rs 129.5 trillion as on November 18, data on the sectoral deployment of credit showed. Specifically, loans to the services sector witnessed the highest Y-o-Y growth, rising 21.3% to nearly Rs 33.2 trillion. Within this, loans to non-banking financial companies (NBFCs) rose 33% YoY.
Loans to retail trade enterprises grew 22% YoY.
Personal loans rose nearly 20% to Rs 38 trillion as on November 18. Within this, consumer durable loans witnessed the highest growth, rising 51.2% YoY.
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“Fintech NBFCs have led the charge in digital loan disbursements with smaller ticket sizes, customised product offerings and faster turnaround. NBFCs have the highest share of personal and consumer durable loans,” Narendra Dixit, head – retail banking, CSB Bank, said.
Apart from consumer durable loans, loans against fixed deposits continued to see traction, rising 36.3% YoY. Credit card outstanding rose 25%. “Recent increase in interest rates and surplus fund moving to deposits have helped better traction on loan against deposit,” Dixit said.
Going ahead, experts contend that loans against deposits will continue to be popular as they enable borrowers to get relatively-cheaper loans without having to liquidate their savings.
Loans to industry rose 13.1% to nearly Rs 33 trillion as on November 18, the data showed. Loans to medium-sized enterprises witnessed the most traction, rising nearly 30% YoY.
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Loans to large enterprises and loans to micro and small enterprises grew nearly 11% and nearly 20% YoY, respectively. “The credit growth has been on an uptrend, with wholesale and retail contributing to the same. Credit for the services sector accelerated primarily due to a rise in NBFCs and trade segments,” credit rating agency CareEdge said in a recent report. “Retail credit growth has strongly been led by the miniaturization of credit, housing, and vehicle loans, and MSME growth has remained elevated due to the Emergency Credit Line Guarantee Scheme.”