Bank credit to industry slows to 6.1%, services sector sees growth: RBI

The pace of growth of bank credit to the industrial sector slowed down to 6.1 per cent in November from 13.0 per cent in the year-ago month.

However, the growth in credit to industry on a year-to-date basis in November in the current financial year (FY24) was slightly higher at 4.9 per cent against 4.4 per cent in the same period last year (FY23), the Reserve Bank of India data showed.

In a statement, the RBI said among major industries, credit growth to basic metal & metal products, food processing, and textiles accelerated in November as compared with the same month last year. The loans to engineering, chemicals & chemical products, and infrastructure decelerated. Based on size, the large industries grew 3.6 per cent in November from 10.3 per cent a year ago. The pace of reduction was sharp for medium-sized industry -- 12 per cent from 27.9 per cent in November 2022 -- and the decline was moderate for the micro and small industry segment at 17.2 per cent from 19.5 per cent a year ago.

The RBI said credit to the services sector grew by 21.9 per cent Y-o-Y in November 2023 as compared with 21.3 per cent a year ago. Within the services sector, the credit growth to non-banking financial companies (NBFCs) tapered down to 21.5 per cent Y-o-Y in November 2023 from 32.4 per cent a year ago.

The retail loans growth decelerated to 18.6 per cent in November 2023 from 19.9 per cent a year ago due to moderation in credit growth to housing. The pace of housing loans was 15 per cent year-on-year (Y-o-Y) in November from 16.6 per cent a year ago. The credit card segment grew 34.2 per cent Y-o-Y from 25.8 per cent a year ago. The other personal loans, which have substantial elements of unsecured loans, moderated at 21.7 per cent from 24.0 per cent a year ago. The RBI has already flagged concern on the rapid pace of unsecured credit, including credit cards, and hiked risk weights for such exposures.

Credit growth to agriculture and allied activities accelerated to 18.2 per cent in November 2023 from 14.0 per cent a year ago, it added.

Meanwhile, according to RBI data in the weekly statistical supplement, the bank credit expanded by 15.8 per cent Y-o-Y as of December 15, 2023, down from 17.4 per cent a year ago. The deposit growth showed improvement with 13.3 per cent Y-o-Y growth from 9.4 per cent a year ago.