Credit card dues, loans to NBFCs zoom

RBI`S MACROECONOMIC AND MONETARY DEVELOPMENTS: MID-TERM REVIEW 2008-09

High interest rates seem to have had an impact on personal loan flows, but there is a spurt in credit-card outstanding, according to the latest data released by the Reserve Bank of India (RBI).

The growth in personal loans, comprising housing, advances against fixed deposits, consumer durables finance and credit card receivables, has moderated on a year-on-year (y-o-y) basis to 17.4 per cent at the end of August this year from 21.4 per cent at the end of August 2007.

But the 86.3 per cent rise in credit-card receivables is a cause for concern for bankers as delinquencies in the segment too are rising. Higher credit card receivables are also attributed to card-holders rolling over their dues.

 

Apart from credit cards, the other worry is the growth in loans to commercial real estate, which remained high. The y-o-y growth was estimated at 46.3 per cent compared with 52.7 per cent up to August 2007. Also, the flow of loans to non-banking finance companies (NBFCs) went up 62.7 per cent on a y-o-y basis up to August this year compared with 49.6 per cent in the corresponding period last year.

On an overall basis, the non-food gross bank credit rose 26.8 per cent on a year-on-year basis up to August-end 2008, which was mainly attributed to an increase in the credit flow to industry — large, medium and small. Though the credit flow to small industrial units rose only 9.7 per cent for the year up to August 2008, the higher demand from sectors such as petroleum, coal and nuclear fuel more than compensated for the slow growth.

For the year up to August 2008, the segment saw a credit flow rise nearly 92 per cent or by Rs 29,891 crore. Oil companies have been large borrowers in the market during the current financial year as they faced tight liquidity conditions on account of the government not reimbursing the subsidy due to them. On a year-on-year basis, up to August 2007, the credit flow to the sector had gone up by 32.9 per cent.

The chemical industry was another sector, which saw a steep jump with credit flow rising 15.1 per cent on a year-on-year basis. Up to August this year, the incremental loan flow to the sector was estimated at Rs 14,918 crore.

Iron and steel (33.7 per cent YoY growth), other metals and metal products (27.4 per cent) and gems and jewellery (15.1 per cent) saw a steep rise in the incremental loan flow during the period up to August 2008.
 

HOW THEY SHARE THE PIE Sectoral deployment of non-food bank credit (in Rs crore)
Sectors	Outstanding as on  Aug 29, '08	Year to year change
		Absolute	% chg
NON-FOOD GROSS BANK CREDIT	23,14,897	4,89,183	27
AGRICULTURE AND ALLIED ACTIVITIES	2,62,481	40,913	19
INDUSTRY (SMALL, MEDIUM & LARGE)	9,32,313	2,18,246	30.6
Small industry	1,30,554	11,559	10
PERSONAL LOANS	5,52,090	81,729	17.4
Housing	2,68,804	32,792	14
Advances against fixed deposit	44,100	2,999	7
Credit card	29,056	13,461	86.3
Education	23,795	6,603	38.4
Consumer durables	8,003	-691	-7.9
SERVICES	5,68,013	1,48,295	35.3
Transport operators	35,989	7,772	27.5
Professional & other services	38,494	13,813	56
Trade	1,29,353	23,084	21.7
Real estate loans	68,196	21,959	46.3
NBFCs	77,039	29,683	62.7

The RBI data showed that at the disaggregated level, up to August 29, 2008, around 45 per cent of the incremental non-food credit (y-o-y) was absorbed by the industry compared with 40 per cent in the corresponding period last year.

Within this, the infrastructure sector accounted for 25 per cent of the incremental credit to industry as against 26 per cent in the same period last year.

Personal loans accounted for nearly 17 per cent of the incremental non-food credit and within this segment, the share of incremental housing loans was at 40 per cent.