With increase in borrowings by the manufacturing firms, the share of loans to the industry sector in bank credit has declined to almost 25 per cert.
Earlier, the Industry segment had a contribution of 27 per cent in bank credit, which was nearly equal to services and personal loans.
The decline can be attributed to increased borrowings by manufacturing firms as the industry recorded a lower than expected rate in comparison to the bank credit.
“According to data on sectoral deployment of bank credit released by the RBI, non-food credit as of end of October 2022 stood at Rs 129 lakh crore — a year-on-year growth of 8.7 per cent. Of this, credit to industry stood at Rs 33 lakh crore, a 4.3 per cent growth during the current fiscal. As against this, loan to services sector and personal loans grew 10.1 per cent and 11.5 per cent to Rs 33.2 lakh crore and Rs 37.7 lakh crore respectively”.
Industry has been a major recipient of bank credit. In the 1970s, the industry accounted for a whopping 60 per cent of bank loans. The loans to businesses and industries have now declined. This can be linked to growth of home loans and other personal loans in the past few years.
Consumer loans, which are an integral part of personal loans, have recorded the highest growth of 25.7 per cent, however, their share of total credit is very low at Rs 34,727 crore.
The home loan portfolio of banks registered a growth of 8.4 per cent and stood at Rs 18.3 lakh crore. Credit card outstanding, which are around Rs 1.8 lakh crore, now account for 1.4 per cent of overall bank credit.
Credit growth in the services segment was driven by loans to non-banking finance companies. Banks have Rs 12.6 lakh crore of NBFC loans on their books, which is a growth of 16 per cent during the current financial year.
The highest growth during the current fiscal (Rs 50,641 crore) was recorded from loans to businesses in the petroleum and energy segment. A significant reason for this growth is the rising crude oil prices.
An additional amount of Rs 43,234 crore was lent to the infrastructure sector with half of the loans in this segment going to the power and roads sector.
(With inputs from TOI)