Private sector banks record over 15% credit growth for third consecutive year in FY24

India's bank credit growth (y-o-y) increased by 15.3 per cent in FY24, net of merger of a non-bank with a bank with effect from July 1, 2023. (19.1 per cent including the merger impact) during 2023-24 as compared to 15.8 per cent rise in the previous financial year. Bank branches in rural, semi-urban and urban areas recorded similar or higher credit growth (y-o-y) vis-?-vis 2022-23, even as metropolitan branches witnessed some growth moderation; all population groups and bank groups, however, maintained double digit loan growth.

Individuals in the household sector accounted for 47.4 per cent of total bank credit in March 2024, and other households {e.g., proprietary concerns, Hindu undivided families (HUF), partnership firms} had another 10.4 per cent share. The share of female borrowers in the banking system has been rising gradually: they accounted for 33.6 per cent of loan accounts and 23.4 per cent of amount of bank loans to individuals in March 2024.

During 2023-24, all major activities recorded double digit growth in bank credit.

The share of personal loans in total bank credit, which has been consistently rising, stood at 30.4 per cent in March 2024 whereas the corresponding share of industry declined to 23.2 per cent.

Private sector banks recorded over 15 per cent growth for the third consecutive year - their share in total credit by SCBs rose to 40.6 per cent in March 2024 from 33.4 per cent five years ago and 19.4 per cent ten years ago; the corresponding share of public sector banks declined to 51.8 per cent from 73.2 per cent ten years ago.

Rapid growth in lending by small finance banks resulted in their share in total credit by SCBs rising to 1.4 per cent in March 2024 from 0.6 per cent five years ago. With general rise in interest rates, the share of loans bearing over 9 per cent interest rate increased to 57.8 per cent of total bank loans in March 2024 as compared with 56.1 per cent share a year ago and 31.4 per cent two years ago.

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