Growth in mortgages in the banking sector slipped to 12.8% year-on-year (y-o-y) in September from 13.2% in August, data released by the Reserve Bank of India (RBI) showed.
Growth in mortgages in the banking sector slipped to 12.8% year-on-year (y-o-y) in September from 13.2% in August, data released by the Reserve Bank of India (RBI) showed. The total outstanding on mortgages in the banking system stood at Rs 9.08 lakh crore as on September 29. Retail loans as a category grew 16.8% y-o-y in September, slower than the 19.7% recorded in September 2016. Outstanding retail loans as on September 29 stood at Rs 17.55 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 September, outstanding on credit cards grew the most – 38.7% — among all categories of loans to individuals. Vehicle loans grew 9.2%, significantly slower than 22.8% in September 2016, while consumer-durable loans dropped 8.6%, as compared to a year-ago growth figure of 21.5%.
Credit to industry contracted on a y-o-y basis for the twelfth straight month in September, falling 0.4% y-o-y to Rs 26.4 lakh crore. In September 2016, the corresponding figure stood at Rs 26.52 lakh crore, nearly 1% higher than the September 2015 level. Industrial credit has been falling almost consistently since August 2016, with September 2016 being the only month of positive growth ever since. Credit deployment in industry fell 8% y-o-y in the medium segment and 0.4% in large industry. Loans to micro and small industries rose 1.7% over the year-ago period. 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.
Bankers are relying on the retail segment to drive credit growth. Chanda Kochhar, managing director and chief executive officer at ICICI Bank, said after detailing the bank’s June quarter results that it expects retail to lead loan growth as the bank reduces exposure to stressed corporates. “We expect that our overall domestic loan growth would still be in the region of about 15% and that will be backed by retail growth of about 18-20%,” she said, adding, “The desirable corporate book, that is, if you take out the current NPAs (non-performing assets), the drilldown list and the restructured portfolio, on the rest of the book, we are growing by 14%.