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The pace of credit to medium and small and micro enterprises (SMEs) moderated on a year-on-year (YoY) basis in April 2023, the first month of FY24. However, the pace of credit to large industries improved in the reporting month. Credit to medium industries grew by 19.1 per cent YoY in April 2023, sharply down from 53.7 per cent in April 2022.
Credit to SMEs registered a growth of 9.7 per cent in April, again sharply down from 29.8 per cent a year ago. Credit to large industries rose by 5.3 per cent as compared with 1.3 per cent a year ago, Reserve Bank of India (RBI) said in a statement.
Reflecting demand from households and individuals, loans in the retail category, especially credit cards and vehicles, have shown robust growth. Overall retail credit expanded 19.4 per cent, up from 14.4 per cent in April 2022. Credit card loan growth touched close to 30 per cent YoY in April 2023 from 20.1 per cent. And, in the vehicles segment, growth was 23.1 per cent, up from 11.4 per cent.
The housing segment showed a steady growth at 14.3 per cent in April 2023 against 13.7 per cent, RBI said.
Pace of the credit-to-services sector accelerated to 21.6 per cent in April from 11.2 per cent a year ago. This was primarily due to improved credit offtake by non-banking financial companies (NBFCs) and trade.
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Loans to NBFCs rose by a hefty 29.2 per cent YoY in April 2023 from 14.7 per cent.
Banks have multifaceted relations with NBFCs. Besides providing liquidity support, many banks buy out loan pools from finance companies to meet priority sector lending norms. Also, banks have co-lending arrangements with NBFCs.
Credit to agriculture and allied activities improved to 16.7 per cent in April 2023 from 10.6 per cent a year ago.
