Banking sector loan growth stays at 15% YoY despite slowdown in services and personal loans

The Banking sector’s loan growth in the services and personal loan segments moderated in August even as the overall year-on-year (yoy) growth in credit was unchanged at 15 per cent for the reporting month. This loan growth excludes the impact of HDFC’s merger with HDFC Bank.

Personal loans growth moderated to 16.9 per cent (yoy) in August 2024 as compared to 18.3 per cent a year ago, largely due to decline in growth recorded in ‘other personal loans’ and ‘vehicle loans’, per RBI data on Sectoral Deployment of Bank Credit .

Credit growth to the services sector decelerated to 15.6 per cent (yoy) in August 2024 from 21 per cent a year ago, primarily due to relatively lower credit growth in ‘non-banking financial companies (NBFCs)’ and ‘trade’ segments.

With the services sector, credit growth (yoy) in ‘commercial real estate’ and ‘computer software’ accelerated during August 2024.

Credit growth to industry strengthened at 9.8 per cent (yoy) in August 2024 compared with 5.3 per cent in August 2023.

Among major industries, credit to ‘chemicals and chemical products’, ‘food processing’, ‘petroleum, coal products and nuclear fuels’ and ‘infrastructure’ recorded a higher growth in August 2024 as compared to their respective growth rates a year ago, while credit growth to ‘basic metal and metal product’, and ‘textiles’ moderated.

Credit to agriculture and allied activities continued to be robust with the growth of 17.7 per cent (yoy) in August 2024, compared with 16.5 per cent during August 2023.

Data on the sectoral deployment of bank credit for August 2024 has been collected from 41 select scheduled commercial banks, accounting for about 95 per cent of the total non-food credit deployed by all scheduled commercial banks.