Credit card & commercial real estate business improves

Banks are showing an uptick in credit card and commercial real estate business. The growth, registered in both the segments, has been significantly higher in July this year as compared to the growth registered a year ago.

Lenders have been witnessing robust growth in the credit card business, suggests the Reserve Bank of India data on sectoral deployment of bank credit.

For the month of July, the credit card outstanding was Rs 27,300 crore, showing a rise of 18 per cent, as compared to a mere 4.4 per cent growth in 2012-13.

Bankers explain that an increase in e-commerce and attractive discounts being offered by banks on the credit cards has led to an increased usage of plastic money. Industry players say that the number of credit cards is increasing, albeit slowly but the spending on credit cards has been increasing steadily with some banks seeing a rise of up to 30 per cent on a year-on-year basis.

Even the commercial real estate space has shown a significant improvement with credit to the sector increasing by 18.2 percent in July this year as compared to last year. With a gradual improvement in the economy, a further pick-up in the real estate market is expected, say experts

In the personal loan space, even the consumer durable market has witnessed an improvement, with retail credit growing to Rs 14,100 crore in July as compared to Rs 9,200 crore in June last year. This comes despite the fact that the country has witnessed a weaker than expected monsoon and the growth in the consumer durable market has not been as good as expected, say industry players.

With the festive season starting in August, the consumer durable, auto and the credit card market is expected to pick up further. In order to boost demand, bankers and the other industry players have doled out special offers in order to attract consumers.

Even credit to the auto sector has increased by 17.9 per cent to Rs 1,377 crore in July as compared to Rs 1,168 crore in June last year. The auto sector has seen a revival in off take after demand being sluggish for several months.

In the overall personal loan space, certain other sectors such as education registered a slower growth than last year. Credit to the education sector that was one of the key focus areas increased only by 1.9 per cent in July as compared to March this year.

Credit to the services sector increased by only 12.3 per cent in July this year as compared with the increase of 13.3 per cent a year ago

Credit to Non-Banking Finance Companies or NBFCs increased by 11.5 per cent in July 2014 as compared with the increase of 5.7 per cent in the same period last year.

Credit to agriculture also registered a strong growth of 19.5 per cent in July, up from 10.5 per cent in the corresponding period last year.