Pace of lending to infrastructure sector tumbles sharply to 1.8% in May

The pace of lending to the infrastructure sector, including power and roads, fell sharply to 1.8 per cent year-on-year (YoY) in May, 2023 compared to 9.8 per cent in May, 2022.
 
Within the segment, the growth in loans to the power sector was at 0.3 per cent YoY in May 2023, down from 9.3 per cent in May 2022. The RBI data showed that outstanding credit to power sector stood at Rs 6.17 trillion in May.
 
According to Reserve Bank of India data, the outstanding bank credit to power sector was Rs 6.17 trillion in May 2023. The share of power sector loans is around half of the bank’s infrastructure loan portfolio of Rs 12.22 trillion as of May 2023. The share of power sector loans is around half of the bank’s infrastructure loan portfolio of Rs 12.22 trillion as of May 2023.

Roads, another crucial segment of the infrastructure sector, also saw moderation in growth to 5.2 per cent YoY in May 2023 from 17.6 per cent a year ago. The outstanding bank loans to the roads sector stood at Rs 2.89 trillion in May 2023.  

However, reflecting pick up business activity in the industrial sector, the credit to units in basic metal and metal products actually showed a reversal in trend with 16.5 per cent YoY growth in May 2023 compared to contraction of 2.3 per cent in a year ago.

The credit to industry registered a growth of 6.0 per cent YoY in May 2023 as against 8.8 per cent year ago. Size-wise, credit growth to large industries improved to 3.9 per cent in May 2023 (2.1 per cent a year ago). The credit growth to medium industries was down to 18.9 per cent (42.9 per cent last year) and loans to micro and small industries expanded by 9.5 per cent (32.7 per cent a year ago).

The credit growth to services sector accelerated to 21.4 per cent (y-o-y) in May 2023 from 12.7 per cent a year ago, primarily due to the improved credit offtake to ‘Non-Banking Financial Companies (NBFCs)’ and ‘trade’. The personal loans expanded by 19.2 per cent YoY in May 2 2023 compared to 16.3 per cent a year ago, mainly driven by ‘housing’ and ‘vehicle loans’.