 "Services, retail demand keeps credit offtake robust in June: RBI data")
The pace of credit offtake continued to be robust in June 2023, with sectors clocking year-on year (YoY) growth of between 8.1 per cent and 26.7 per cent.
Reserve Bank of India (RBI) data showed the services sector clocked a pace of 26.7 per cent in June against 12.8 per cent a year ago.
The growth in lending to services was primarily due to the improved credit offtake to non-banking financial companies (NBFCs) – 35.1 per cent YoY in June 2023 (18.1 per cent in June 2022) and trade at 17.3 per cent (16.7 per cent in June 2022).
The outstanding credit was Rs 38.85 trillion at the end of June 2023.
The retail loans segment retained its uptrend and grew 20.9 per cent in June 2023 vis-a-vis 18.1 per cent in June 2022. It was primarily driven by housing (15.1 per cent) and vehicle loans (22.9 per cent).
The credit card portfolio grew by 36 per cent. Total retail credit stood at Rs 42.6 trillion, RBI data showed. Bankers said generally the first quarter (April-June) is marked by slower growth due to subdued activity.
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However, the higher pace of growth built in FY23 has continued in the current fiscal also, aided by resilient expansion in economic activity and rising capital expenditure.
The higher working capital limits due to rising input costs have shaped the trend. The overall bank credit grew by 16.2 per cent in June 2023, up from 14.5 per cent in June 2022.
Till mid-July also, credit offtake continued to show robust growth, increasing by 20.2 per cent YoY to reach Rs 147.6 trillion for the fortnight ended July 14. This surge was primarily driven by the impact of HDFC’s merger with HDFC Bank, which took effect in July 2023, according to CARE Ratings.
The growth in credit to industry moderated to 8.1 per cent in June 2023 from 9.5 per cent in June 2022.
Size-wise, credit to the medium-sized industrial segment grew at a much lower rate of 13.2 per cent YoY in June 2023 against 47.8 per cent in June 2022. Credit growth to micro and small industries was 13 per cent as against 29.2 per cent a year ago.
Credit growth to the large industries’ segment accelerated to 6.4 per cent in June 2023 from 3.2 per cent in June 2022.
Credit growth to agriculture and allied activities — amid the onset of monsoon and kharif season — was 19.7 per cent in June 2023 against 12.9 per cent in June 2022.