Festive season pushes retail lending in Sept to 16.6% from 15% a year ago

Consumer durable and housing loan accelerated the most, service sector witnesses a sharp fall in the credit growth rate

Banks' thrust on retail lending is finally beginning to pay off. As the pace of growth in this segment accelerated during the festive season, retail lending of the sector rose to 16.6 per cent in September 2019 from 15.1 per cent in September 2018.

As per monthly data released by Reserve Bank of India on the back of the start of festive season, the pace of growth in housing loans rose to 19.3 per cent in September 2019 compared to 13.8 per cent in September 2018. The outstanding portfolio grew from Rs 10.5 trillion in September 2018 to Rs 12.53 trillion in September 2019.  

Consumer durable loan growth shot up by 68.8 per cent to Rs 5445 crore from -3.1 per cent, which was Rs 3225 crore on yearly basis.  

Senior State Bank of India executive said, "The credit in retail segment has improved especially during the festival period which commenced in September. The good monsoon will support further growth in loans especially in rural and semi urban areas during second half.”

SBI retail loan book grew by 18.9 per cent on yearly basis till September end.

To make the most of the festive season, banks have aggressively pushed many offers like waiving off processing charges and flexible payment plans to lure the customers.

However, vehicle loans declined to 4.1 per cent in September 2019 from 9.4 per cent of September 2018. Credit card outstanding also slipped to 25.9 per cent from 31.7 per cent on yearly basis.

Adverse effect of the economic slowdown was clearly reflected on the credit off take of the services sector. Credit growth to the services sector decelerated sharply to 7.3 per cent in September 2019 from 24.0 per cent in September 2018. Professional services were the worst hit witnessing a sharp decline to 6.1 per cent compared to 24 per cent on yearly basis.

Food credit accelerated to 26 per cent from 2.8 per cent. Non food credit decelerated from 11.3 per cent to 8.1 per cent. Credit to agriculture & allied activities increased by 7.0 per cent in September 2019 as compared with an increase of 5.8 per cent in September 2018.

On yearly basis, loans extended to the industries also inched up and stood at 2.7 per cent compared to 2.3 per cent.