Robust Growth in Industrial and Housing Credit Amidst Slowing Personal Loans

In October 2024, RBI data shows that bank credit to industry grew by 8% while agriculture saw a 15.5% increase. Notably, sectors like chemicals and petroleum experienced higher credit growth. Meanwhile, personal loans' growth slowed to 15.8%, but housing loans saw an acceleration.

According to data released on Friday by the Reserve Bank of India (RBI), bank credit to the industry increased by 8 percent in October 2024, compared to a 4.8 percent rise during the same period last year.

The RBI's data further reveals that credit to the agriculture sector and related activities grew by 15.5 percent year-on-year in October, though this represented a slight dip from the previous year's growth rate of 17.4 percent.

Within major industrial sectors, the credit registered notable growth in 'chemicals and chemical products', 'petroleum, coal products and nuclear fuels', and 'all engineering'.

The landscape for personal loans showed a slowdown, with a growth reduction from 18 percent to 15.8 percent year-on-year, primarily influenced by declines in 'other personal loans', 'vehicle loans', and 'credit card outstanding'. However, the housing segment bucked the trend with accelerated growth.

The services sector credit grew at a rate of 14.1 percent, significantly lower than last year's 20.4 percent growth, mainly due to reduced lending to 'non-banking financial companies' (NBFCs) and the trade segment. Conversely, 'commercial real estate' credit saw an uptick in growth.

The overall non-food bank credit expanded by 12.8 percent, a slight reduction from the previous year's 15.5 percent. The RBI's analysis is based on data collected from 41 leading commercial banks, which represent approximately 95 percent of the total non-food credit across scheduled commercial banks.

(With inputs from agencies.)