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Banks' outstanding retail loans grew 14.5 per cent in March 2013, compared with 12.9 per cent growth in the corresponding month of 2012, according to Reserve Bank of India (RBI) data released on Tuesday.
All other major segments slowed during 2012-13 financial year, the data showed. As economic growth slowed down in the last financial year, resulting in muted credit demand from companies, banks had shifted their focus towards retail loans.
Credit to industry grew 15.7 per cent in March, compared with 20.3 per cent in the corresponding month last year.
The fall was also observed in priority sector lending. Credit in priority sector grew 8.6 per cent in March, compared with 12.1 per cent growth in March last year.
In personal loans, all segments grew except education loans. Although lending against fixed deposits, shares and bonds also slowed down, such portfolio forms a very small amount of the banking systems asset book.
Vehicle loans grew 24.9 per cent in March against 22.2 per cent in the year-ago period.
Credit card outstanding showed growth of 23.8 per cent in March this year, compared with 12.9 per cent in the corresponding month of last year.
There was growth of 14.6 per cent in housing loans, compared with 12.3 per cent growth in March 2012.
Banks significantly lowered the interest rates on retail in FY13, boosting the credit growth in this segment.
In the priority sector, direct lending to agriculture grew 8.1 per cent against 13.3 per cent last year.
Loans to priority sector housing were almost flat, rising just 0.6 per cent, compared with 10.7 per cent growth of last year.
Education loans in the priority sector also grew at a lesser pace, rising 9.4 per cent, against 12.3 per cent last year.
Recently, Finance Minister P Chidambaram had asked banks to be proactive in lending to students for education.
RBI had also said private and foreign banks were hesitant to give education loans.
Last week, RBI Deputy Governor K C Chakrabarty said banks must say yes to educational loans.
LOAN STORY
- Retail credit grows year-on-year while other segments slow down
- Banks had lowered interest rates on retail segment last year
- However, in retail loans, educational lending has slowed down
- Finance ministry and the Reserve Bank of India have asked banks to disburse more education loans
