Retail credit growth moderates after seeing a jump in July, shows data

Retail credit activity covering housing, credit cards and the vehicle segment moderated in August 2020 over the previous month.

Retail loans grew by Rs 16,879 crore in August while it had grown by Rs 40,853 crore in July, according to Reserve Bank of India (RBI) data. Retail loans had grown by Rs 11,518 crore in June.

These critical categories saw a slowdown. Housing loans rose by just Rs 1,936 crore in August (Rs 11,663 crore in July), and credit card outstanding was also up by Rs 3,442 crore (Rs 3,805 crore in July). The vehicles segment also saw a marginal rise of Rs 2,072 crore (Rs 3,095 crore).

The outstanding retail loan book stood at Rs 25.48 trillion in August, up from Rs 25.31 trillion in July.

Retail credit had seen a sharp drop of Rs 62,861 crore in April followed by moderate contraction of Rs 11,928 crore in May.

Economic activity and credit expansion were severely hit in April due to stringent nationwide lockdown to contain the Covid pandemic. May was also marked by very dull activity. June and July have shown upward trajectory. The strength of recovery is gradually building up, bankers said.

The micro and small enterprises (MSME) segment saw a contraction of Rs 182 crore in outstanding loans. Loans to medium-sized units rose by Rs 1,936 crore. The outstanding loan to small and medium enterprises (SMEs) stood at Rs 3.54 trillion in August (Rs 3.54 trillion in July).

On a year-on-year (y-o-y) basis, non-food bank credit growth decelerated to 6 per cent in August from 9.8 per cent in August 2019.

Credit to agriculture and allied activities increased by 4.9 per cent in August 2020 compared to a growth of 6.8 per cent in August 2019.

Credit growth to industry decelerated to 0.5 per cent in August this year from 3.9 per cent in the same month last year.