Private banks lead in credit growth in Q2 as demand grows: RBI data

Annual growth in working capital loans by banks increasing after contracting in March 2021

Private sector banks outpaced their state-owned peers in the second quarter ended September 2022, increasing their share in total credit to 38.4 per cent from 37.5 a year ago.

The share of private lenders was 29.6 per cent five years ago, said the Reserve Bank of India in a statement.

According to CARE Ratings assessment, the loan portfolio of private sector banks grew 20.6 per cent year-on-year (Y-o-Y) at end of September 2022. State-owned banks grew 18.7 per cent in the same period.

RBI said bank credit growth (y-o-y) accelerated further to 18 per cent in September 2022, compared with 14 per cent a quarter ago and 5.8 per cent a year ago.

Pent-up demand during the pandemic and an economic upturn are driving credit growth in FY23. The pace of credit growth is high in December as well. Bank credit increased 17.5 per cent Y-o-Y till December 02, 2022, up from 7.3 per cent a year ago

The RBI said retail loans recorded 21.9 per cent growth in September 2022, accounting for one third of the total incremental credit in the last one year. The share of individuals in the total credit reached an all-time high of 44.4 per cent in September 2022. The female borrowers accounted for 22.6 per cent of borrowings by individuals.

Credit momentum in the industrial sector continued for the fourth successive quarter to record double-digit growth in September 2022. Annual growth in working capital loans by banks, which stood in contraction zone in March 2021, increased successively thereafter and stood at 16.5 per cent (y-o-y) in September 2022, said the RBI.