Loans to industry show significant uptick in July, shows RBI data

Growth in personal loans down sharply

The credit to industry rose sharply to 10.2 per cent year-on-year (Y-o-Y) in July 2024 from 4.6 per cent in July 2023, reflecting the economic growth momentum. The non-food bank credit registered a growth of 15.1 per cent in July 2024 as compared with 14.7 per cent a year ago, Reserve Bank of India (RBI) data showed.

The rise in loan offtake was witnessed across three industry segments – micro and small, medium-sized, and large industry. The pace of loans to large industries increased to 8.5 per cent Y-o-Y in July 2024 from 3.5 per cent a year ago.

The medium-sized segment showed a 17.2 per cent Y-o-Y growth as against 9.8 per cent. The micro and small segment saw credit growth rising to 13.3 per cent Y-o-Y in July 2024 from 9.9 per cent.

RBI in a statement said among major industries, Y-o-Y growth in credit to chemicals, food processing, and infrastructure was higher in July 2024. However, credit growth in basic metal and metal products and textiles moderated.

Bankers said the credit growth from industry is broad-based. There is also an element of preparation for the festive season. The festive season straddles part of the second quarter and continues through the third quarter.

The retail loan growth moderated to 17.8 per cent Y-o-Y in July 2024 from 18.4 per cent a year ago, largely on moderation in credit in the personal loan segment and vehicle loans, RBI said.

The growth in the other personal loan category, which consists mainly of unsecured credit, fell sharply to 14.5 per cent Y-o-Y in July 2024 from 25 per cent in July 2023, RBI data showed.

However, credit growth to ‘housing’, the largest constituent of the segment, accelerated to 19.1 per cent Y-o-Y in July 2024 from 12.9 per cent Y-o-Y in July 2023. The credit growth numbers exclude the impact of the merger of HDFC with HDFC Bank.

Credit growth to the services sector was 15.4 per cent Y-o-Y in July 2024 compared to 19.7 per cent a year ago, primarily driven down by lower credit growth in non-banking financial companies (NBFCs) and trade segments.

The credit to NBFCs grew by 12.7 per cent Y-o-Y in July 2024, down from 19.9 per cent a year ago. The credit to trade declined to 15.2 per cent from 18.1 per cent in July 2023. Credit flow in commercial real estate; tourism, hotels and restaurants; and computer software accelerated during July 2024.

The loan growth in agriculture and allied activities remained robust at 18.1 per cent Y-o-Y in July 2024 compared to 16.7 per cent in July 2023, RBI added.