Reflecting the muted economic growth, outstanding bank credit to industries remained flat and recorded a 0.1% year-on-year (y-o-y) growth to Rs 26.6 lakh crore in April, data from the Reserve Bank of India (RBI) showed on Wednesday.
Loans to industry was driven mainly by disbursals to large corporates at 2.2% y-o-y. However, loans to medium and micro & small industries declined 14% and 6.7% respectively.
Within industry, a secular dip in the pace of growth was seen across sectors. Loan disbursals to the infrastructure sector, which includes power, roads, telecommunication and others, declined 1.5% y-o-y to Rs 9.1 lakh crore in April.
Disbursals to the iron and steel industry grew at a faster clip of 10.9% y-o-y compared with 7.5% y-o-y last year. The growth in disbursals has largely been due to refinance by banks (some under the RBI’s 5/25 scheme) rather than fresh demand.
Speaking at Q4 results press conference, chairman Arundhati Bhattacharya said that the bank expects loan growth to come in at around 13-17% in FY17. “We are seeing a lot of traction in many more segments. We need to see demands getting improved. we are beginning to see it. The economy will revive and credit growth will follow. Credit growth will not precede the economic growth,” she explained.
The rate of growth in loans to services rose to 10.9% y-o-y from 6.6% y-o-y a year ago, the data showed.
Within services, loan disbursals to professional services grew the fastest, followed by loans to non-banking finance companies (NBFCs). Loans to professional services stood at an outstanding of Rs 1.21 lakh crore while those to NBFCs was Rs 3.65 lakh crore.
The driver of non-food credit continued to be the personal loan segment. Retail loans grew fastest at 19.7% y-o-y to Rs 14.1 lakh crore. Within retail, growth in home loans stood at 18.1% y-o-y while credit card outstanding rose at 31.2%. Most banks have relied on the retail segment to shore up their credit growth for 2016-17 with pick up in corporate loan growth still muted.