Fall of industrial loan share in bank credit, personal loans up: RBI data

The Reserve Bank on Wednesday notified that the share of industrial loans in total credit has been gradually declining over the last decade while that of personal loans is on the rise

As per the ‘Basic Statistical Return on Credit by Scheduled Commercial Banks (SCBs) in India – March 2022′ released by the RBI, both industrial and personal loans had nearly 27 per cent credit share each in March 2022.

Likewise, after declining the previous year, loans to the industrial sector saw a 4.7% gain in 2021–22.

Earlier this month, Finance Minister Nirmala Sitharaman pushed the corporate sector to increase investment in the manufacturing sector.

Furthermore the RBI said that as credit demand from the retail segment has become more distinct in recent years, the portion of small-sized loans is also going up steadily.

Despite the price effect on loan size over time, the share of loans under Rs 1 crore increased to nearly 48% in March 2022 from about 39% five years ago, while the share of loans exceeding Rs 10 crore decreased to almost 40% from roughly 49%.

The share of loans bearing less than 7 per cent interest rate rose to 23.6 per cent in March 2022 compared to 15.1 per cent a year ago.

It added that the declining share of public sector banks (PSBs) to total bank credit has continued.

PSBs’ share in total credit by SCBs stood at 54.8 per cent in March 2022 compared to 65.8 per cent five years ago and 74.2 per cent ten years ago.

On the other hand, the share of private sector banks nearly doubled to 36.9 per cent over the last ten years.

Bank branches in urban, semi-urban, and rural areas maintained double-digit annual growth in credit in March 2022, whereas credit growth for metropolitan branches increased significantly to 9.2 per cent from 1.4 per cent in the previous year.

Maharashtra (26.2 per cent), the National capital territory (NCT) of Delhi (11.3 per cent), Tamil Nadu (9.2 per cent) and Karnataka (6.8 per cent) together accounted for over half of the credit extended by banks.

Source: Economic Times (Inputs from PTI)

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