Bank credit growth to NBFCs, personal loans moderate in March: RBI data

Bank credit growth to non-banking financial companies (NBFCs) slowed to 15.3 per cent year on year in March 2024, against 29.9 per cent a year ago, according to data released by the Reserve Bank of India (RBI) on Tuesday.

In November last year, the regulator increased the risk weight of unsecured loans to 125 per cent from 100 per cent to address build-up of risks. Risk weights for bank exposure to NBFCs were also raised by 25 bps in cases where the risk weight is below 100 per cent.

Retail loans growth also moderated to 17.7 per cent year-on-year in March 2024, down from 21.0 per cent a year earlier, primarily due to decelerated growth in vehicle loans and other personal loans, which are mainly unsecured loans.

 

On the other hand, credit growth to industries grew by 8.5 per cent year-on-year in March up from 5.6 per cent in March 2023. Among major industries, growth in credit to 'chemicals & chemical products', 'food processing', and 'infrastructure' accelerated in March 2024 compared with the previous year, while that to 'basic metal & metal products' moderated.

Credit growth to Credit expansion in the services sector also saw an improvement, rising to 20.2 per cent year-on-year in March 2024 from 19.6 per cent the previous year, driven by increased credit to 'transport operators' and 'commercial real estate'.

Credit growth in agriculture and allied activities remained robust, reaching 20.1 per cent year-on-year in March 2024, up from 15.4 per cent in the corresponding month a year ago.  Non-food bank credit registered a growth of 16.3 per cent during the month as compared with 15.4 per cent a year ago.