Loans to industry also grows in double digits

A strong revival in corporate demand in addition to steady growth in retail, agri and services loans pushed up credit growth to 16 percent in August, according to the latest data on sectoral deployment in bank credit.

On a year-on-year (y-o-y) basis, non-food bank credit rose 16.0 per cent in August 2022 as compared with 6.7 per cent a year ago as credit growth to industry accelerated to 11.4 per cent in August 2022 from 1.5 per cent in August 2021, according to RBI’s latest data on sectoral deployment in bank credit.

Loans to large industry grew by 6.4 per cent against a contraction of 2.6 per cent a year ago as large corporates are coming to banks to meet their working capital needs. Loans to the medium size firms grew 35.6 per cent in August 2022 as compared with 52.3 per cent last year, while credit growth to micro and small industries accelerated to 28.2 per cent from 12.1 per cent during the same period.

Within industry, credit growth to ‘all engineering’, ‘basic metal & metal products’, ‘beverage & tobacco’, ‘cement & cement products’, ‘chemicals & chemical products’, ‘food processing’, ’glass & glassware’, ‘infrastructure’, ‘leather & leather products’, ‘petroleum, coal products and nuclear fuels’, ‘rubber, plastic & their products’, ‘vehicles, vehicle parts & transport equipment’, and ‘wood & wood products’ accelerated in August 2022 as compared with the corresponding month of the previous year. However, credit growth to ‘construction’, ‘gems & jewellery’, ‘mining and quarrying’, ‘paper & paper products’, and ‘textiles’ decelerated/contracted.

Retail loans growth improved to 19.5 per cent in August 2022 from 12.8 per cent a year ago, driven primarily by ‘housing’ and ‘vehicle loans’ segments.

Credit growth to services sector accelerated to 17.2 per cent in August 2022 from 2.1 per cent a year ago, mainly due to improved credit offtake to ‘NBFCs’ and ‘trade’ sectors.

Credit growth to agriculture and allied activities remained robust at 13.4 per cent in August 2022 (13.0 per cent a year ago).

Source: Economic Times

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