Banks see pick up in credit demand from farm, industry and services sector in Feb 2024

Non-food bank credit registered a higher growth of 16.5 per cent year-on-year (yoy) in February 2024 amid healthy credit demand from sectors such as agriculture and allied activities, industry and services.

However, personal loans growth moderated due to decelerated growth in vehicle loans and other personal loans, according to RBI’s data on Sectoral Deployment of Bank Credit .

Non-food bank credit grew at 15.9 per cent yoy in February 2023.

• Also read: Credit cards-in-force cross 10 crore mark in Feb even as spends fall 10%

Credit growth to agriculture and allied activities remained robust at 20.1 per cent yoy in February 2024 (15.0 per cent a year ago), per RBI statement.

Credit to industry grew by 8.6 per cent (y-o-y) in February 2024 as compared with 6.8 per cent in February 2023.

Major industries

“Among major industries, growth in credit (y-o-y) to ‘food processing’, ‘infrastructure’ and ‘textiles’ accelerated in February 2024 as compared with the corresponding month of the previous year, while that to ‘basic metal & metal products’ and ‘chemicals & chemical products’ decelerated,” RBI said.

Credit to services sector grew by 21.2 per cent yoy in February 2024 (20.5 per cent a year ago).

Among major contributors, growth in credit (yoy) to ‘trade’ and ‘commercial real estate’ improved while that to ‘non-banking financial companies (NBFCs)’ decelerated in February 2024 compared to February 2023.

Personal loans growth moderated to 18.1 per cent yoy in February 2024 (20.6 per cent a year ago) due to decelerated growth in vehicle loans and other personal loans.

The deceleration in credit growth to “NBFCs” and “other personal loans” needs to be seen in the context of RBI increasing the risk weights in respect of Banks’ consumer credit (unsecured) exposure (outstanding as well as new), credit card receivables, and exposure to NBFCs which give unsecured loans.

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