Unsecured retail credit growth slows down in April 2024: RBI data

Credit offtake by services, industry stays robust

The pace of growth in unsecured retail credit, loans without collateral, and credit cards slowed sharply in April 2024, showing the impact of the Reserve Bank of India’s (RBI’s) steps to curb high growth in these segments.

The RBI data showed the credit card outstanding rose 23 per cent year-on-year (Y-o-Y) in April 2024, down from 31 per cent a year ago. Also, sequential growth in April 2024 over March 2024 was 1.6 per cent compared to 3 per cent in April 2023 over March 2023.

Growth in the other retail loans category, which predominantly covers unsecured credit, nosedived to 17.1 per cent Y-o-Y in April 2024 from 25.7 per cent a year ago.

Sequentially, it was down 0.3 per cent in April 2024 over March 2024 compared to 1.6 per cent in April 2023 over March 2023.

In November 2023, the RBI had increased risk weightings on certain loan categories of unsecured credit by 25 per cent to signal to lenders to moderate the pace of high growth and manage stress.

The RBI in a statement said growth in retail loans moderated to 17.4 per cent Y-o-Y in April 2024 compared to 19.4 per cent a year ago, despite accelerated expansion in credit to housing, primarily due to slowdown in vehicle loans.

Credit growth to agriculture and allied activities accelerated to 19.7 per cent in April 2024 from 16.8 per cent in April 2024.

Credit to industry grew 6.9 per cent Y-o-Y in April 2024 as compared to 7.2 per cent in April 2023.

Among major industries, Y-o-Y growth in credit to engineering, chemicals and chemical products, food processing, infrastructure, and textiles accelerated in April 2024.    

Credit growth to the services sector was robust at 19.2 per cent in April 2024 as against 21.3 per cent a year ago, supported by improved credit growth to “commercial real estate” and “professional services”. Credit growth to non-banking financial companies and trade, however, decelerated in April 2024 as compared to April 2023.