Infra lending slows in December; gold loan growth sees sharp uptick

Lending to the infrastructure sector, covering power, roads, ports, and airports, rose by just 1 per cent year-on-year (Y-o-Y) in December 2024, down from 5.8 per cent Y-o-Y in December 2023.

 

According to Reserve Bank of India (RBI) data, in absolute terms, bank credit to infrastructure rose by Rs 12,657 crore in 12 months to Rs 13.14 trillion in December 2024. In the previous 12 months, lending in absolute terms had grown by Rs 78,607 crore to Rs 13.01 trillion in December 2023.

 

Loans to the power sector grew by 1.7 per cent Y-o-Y in December 2024, down from 3.8 per cent Y-o-Y a year ago. For roads, the growth was 2.8 per cent Y-o-Y, compared to 5.9 per cent in December 2023.

 

The Reserve Bank of India, in a statement, said bank credit to industry expanded by 7.4 per cent Y-o-Y as of December 27, 2024, compared with 7.5 per cent a year ago. Within this, loans to micro and small enterprises grew by 9.8 per cent Y-o-Y in December 2024, down from 14.8 per cent a year ago.

 

Lending to medium-sized industries showed substantial improvement, with 19.9 per cent Y-o-Y growth in December 2024, compared to 8.7 per cent in December 2023. However, the pace moderated for large industries to 5.1 per cent, down from 6.3 per cent.

 

Non-food credit grew by 12.5 per cent in December 2024, down from 15.8 per cent Y-o-Y a year ago. These figures exclude the impact of the HDFC-HDFC Bank merger.

 

Bank credit growth in the retail segment, covering housing, vehicle, credit cards, and personal loans, moderated to 14.9 per cent Y-o-Y in December 2024, down from 17.6 per cent a year ago.

 

The other personal loans segment, which mainly comprises unsecured credit, showed 9.7 per cent Y-o-Y growth in December 2024, compared to 20.8 per cent in December 2023. Credit card loans also saw moderation in growth, at 15.6 per cent in December 2024, down from 32.6 per cent a year ago.

 

In November 2023, the RBI hiked risk weights on exposure to unsecured and consumer credit. Vehicle loan growth declined to 8.8 per cent in December 2024, down from 19.7 per cent in December 2023.

 

However, housing—the largest constituent of the retail segment—recorded accelerated growth.

 

Loans in the housing segment grew by 16.7 per cent in December 2024, up from 14.3 per cent a year ago. The gold loan portfolio showed a sharp uptick, at 71.3 per cent Y-o-Y, compared to 17 per cent in December 2023.

 

Credit growth in agriculture and allied activities declined to 12.5 per cent Y-o-Y in December 2024, down from 19.4 per cent a year ago.

 

Credit growth to the services sector moderated to 13.0 per cent Y-o-Y in December 2024, down from 20 per cent Y-o-Y in the corresponding fortnight of the previous year (2023). This was primarily due to decelerated growth in credit to non-banking financial companies (NBFCs) and trade segments.