Agri, retail, MSME credit growth speeds up in July, shows uptick in economy

The pace of lending to Agriculture, Retail and Micro, Small and Medium Enterprises (MSMEs) gathered pace in July 2021 over the same month in 2020, reflecting gradual uptick in business activity and demand in the economy.

However, the growth, on Year-on-Year (Y-o-Y) basis, in gross bank credit on July 21 at 6.1 per cent was still lower than 6.5 per cent a year ago, according to the Reserve Bank of India. Credit to agriculture and allied activities continued to perform well, registering an accelerated growth of 12.4 per cent in July 2021 as compared to 5.4 per cent in July 2020.

Retail loans clocked a growth of 11.2 per cent in July 2021 as compared to 9.0 per cent a year ago, primarily due to higher activity in ‘loans against gold jewellery’ and ‘vehicle loans’.

Credit growth to industry remained subdued at 1.0 per cent in July 2021 vis-à-vis 0.9 per cent in July 2020. Size-wise, credit to medium industries registered a robust growth of 71.6 per cent in July 2021 as compared to a contraction of 1.8 per cent a year ago.

Credit to micro and small industries accelerated to 7.9 per cent in July 2021 as compared to a contraction of 1.8 per cent a year ago, while credit to large industries contracted by 2.9 per cent in July 2021 as compared to a growth of 1.4 per cent a year ago.

Credit growth to the services sector slowed to 2.7 per cent in July 2021 from 12.2 per cent in July 2020, mainly due to deceleration in credit growth to finance companies and and ‘commercial real estate’.