Non-food credit growth slows to 7.7% in June

Non-food credit growth of commercial banks slowed to 7.7% in June 2015 as against 13% expansion in the same period last fiscal.

The non-food credit growth in June was also slower than 9% in the previous month of May, RBI data showed.

Credit to agriculture and allied activities increased by 10.6% in the period as against an increase of 18.8% in the year-ago month.

RBI collects data on a monthly basis from select scheduled commercial banks, accounting for about 95% of the total non-food credit deployed by all scheduled commercial banks.

In the month, credit to industry rose by 4.1% against that of 10.2% in June 2014.

"Deceleration in credit growth to industry was observed in all major sub-sectors," RBI said.

Advances to the services sector increased by 6% in the reporting period as compared with the increase of 13.6% in the same month last year.

Loans to non-banking financial companies (NBFCs) increased marginally by 1.6% as compared with the increase of 16.7% year-ago.

In May, banks credit to NBFCs had increased by 5.6%.

According to analysts, NBFCs reliance on bank borrowing has reduced in recent past and they are raising money through debt routes where the cost of funds is lower.

The growth in personal loans given by these banks increased by 16.5% in the month as compared with a rise of 15.2% in June 2014.