Bank loans to commercial real estate surged during the year ended May 20, registering a growth of 20 per cent, compared to a one per cent growth in the same period the previous year, data from the Reserve Bank of India (RBI) showed. Overall bank credit has risen 21.9 per cent in May, compared with 18.1 per cent in the corresponding period last year.
Similarly, growth in home loan disbursements grew at 17.4 per cent, compared with 9.6 per cent the previous year. This was despite RBI increasing risk weight of high-value home loans. During the second quarter review of the monetary policy of 2010-11, RBI had raised the risk weight for residential housing loans of Rs 75 lakh and above to 125 per cent.
Bank loans to non-banking finance companies also saw a robust growth of 54.4 per cent —significantly higher than the 17.5 per cent in the corresponding period last year.
Loan growth to the farm sector, however, declined sharply, to 12.8 per cent in May, as compared with 21 per cent the previous year.
Retail loans, comprising home, auto and education, among others, rose 17.7 per cent, against 5.6 per cent in the corresponding period last year.
In retail, while consumer durables and vehicles loans surged, growth in education loan fell. Banks, worried about delinquencies in study loans, became cautious in disbursing such loans. As a result, education loan growth fell from 29 per cent to 19 per cent. Growth in consumer durables was 26.6 per cent, compared to 1.8 per cent; while auto loan grew 24 per cent, compared to 7.3 per cent.