Credit to retail, industry accelerates in August, slows in services sector

Loans for farming and allied activities continued to perform well, up 11.3% this August from 4.8% a year ago

Keeping up with the upturn in economic activity, bank credit, especially to the retail sector and to industry, gathered pace in August 2021. The retail segment showed an accelerated growth of 12.1 per cent in August 2021 as compared to 8.5 per cent a year ago on higher volume in housing and vehicle credit, according to Reserve Bank of India data.

The credit to industry rose by 2.3 per cent in August 2021 from 0.4 per cent in August 2020, according to Reserve Bank of India data.

The credit to agriculture and allied activities continued to perform well, registering an growth of 11.3 per cent in August 2021 as compared to 4.8 per cent in August 2020.

However, the credit growth in the services sector moderated to 3.5 per cent in August 2021 from 10.9 per cent a yeat ago mainly due to contraction in credit growth to NBFCs and commercial real estate.

Referring to bank credit to industry, RBI said loans to medium size unit showed 63.4 per cent growth in August 2021 as compared to 4.4 per cent last year.

Credit to micro and small industries also accelerated to 10.1 per cent in August 2021 from a contraction of 1.1 per cent a year ago. The credit to large industries shrunk by 1.7 per cent in August 2021 as compared to a growth of 0.5 per cent a year ago.

Within industry, credit to engineering, chemical & chemical products, gems & jewellery, infrastructure, mining and quarrying accelerated in August 2021 as against pace in August 2020.

However, credit growth to basic metal, cement & cement products, construction, vehicles, vehicles parts and transport equipment’ either decelerated or contracted, RBI added.