Retail trade and NBFCs drive credit growth in services: RBI data

Retail trade, NBFCs drive credit growth in services

Robust offtake from retail and non-banking financial companies (NBFCs) increased credit to services by 21.5 per cent year-on-year (YoY) in January 2023 as against 5.7 per cent a year ago.

The Reserve Bank of India (RBI) data showed loans to retail increased 21.8 per cent YoY in January 2023, up from the 6.9 per cent in January 2022.

Loans to NBFCs grew by 31 per cent as against 9.9 per cent a year ago. NBFCs lend in segments like retail; micro, small and medium enterprises; and farming, besides giving micro loans.

Credit to households and individuals, reflecting the fund flow to the retail segment, has been robust, showing 20.4 per cent YoY growth in January 2023, up from the 12.8 per cent a year ago.

This was largely driven by housing and vehicle loans. Housing loans grew 15.4 per cent YoY in January 2023 against 12.8 per cent in January 2022.

The home-loan portfolio of banks stood at Rs 18.88 trillion in January 2023, up from the Rs 16.36 trillion a year ago.

Banks gave over Rs 1 trillion for purchasing vehicles in 12 months, leading to 25.5 per cent YoY growth in loans in January 2023 as against 9.6 per cent YoY growth in January 2022, the RBI data showed.

Credit to industry registered a growth rate of 8.7 per cent in January 2023 as compared with 5.9 per cent in January 2022.

Size-wise, credit to large industry grew by 6.5 per cent as compared with 0.2 per cent a year ago.

The credit growth of medium industries moderated to 18.1 per cent as against 52.4 per cent last year.

Credit to micro and small industries registered a growth rate of 15.2 per cent in January 2023 (23.3 per cent a year ago), it added.

Credit growth to agriculture and allied activities improved to 14.4 per cent in January 2023 from 10.4 per cent a year ago.