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Consumers borrowed more money from banks in May this year compared with the same month last year to fuel increased appetite for televisions and air-conditioners (consumer durables), or to own a house or vehicle.
In May , retail loans of banks grew by 16.3 per cent to Rs 927,300 crore (Rs 797,400 crore in May 2012), according to Reserve Bank of India data.
The provisional data relates to banks, which account for 95 per cent of the total non-food credit extended by all scheduled commercial banks (SCBs).
Bulk of the banks’ retail loan growth happened in the housing loan segment, which accounts for over half of the total retail credit.
Housing loans of banks recorded a growth of Rs 70,000 crore or 17.1 per cent to Rs 479,900 crore in May (against Rs 409,900 crore in May 2012).
Experts attribute this robust growth to cheap interest rates offered to home loan borrowers by banks and the growing demand for housing in small towns and semi-urban areas.
Rising demand
The soaring temperatures in May coupled with summer vacations also resulted in a considerable demand for consumer durable loans for buting ACs, refrigerators and TVs. Consumer durable loan demand jumped 22 per cent in May to Rs 8,900 crore.
The slowdown in the automotive sector notwithstanding, people’s demand for better and faster mode of transport led to a rise in demand for vehicle loans to Rs 116,700 crore in May 2013 from Rs 91,400 crore, a year ago.
“Banks have increased their focus on loans to retail , Small and Medium Enterprises and agriculture , as corporate credit growth is not happening as fast,” said Mukesh Kumar Jain, Chief General Manager, Dena Bank.
Lending to industry slowed in May. It was 15.5 per cent when compared to the same period last year. In May last year , the growth in bank loans to the industry was higher, at 19.4 per cent.
Banks appear to have become cautious in their exposure to mid-sized corporations due to their contribution to their rising bad loans. Loans to the mid-corporate segment grew by a mere 7.8 per cent in May.
Education loans grew 10.2 per cent and personal loans grew 11 per cent in May.
Overall, non-food credit of SCBs grew 14.9 per cent to Rs 49,44,700 crore.
>satyanarayan.iyer@thehindu.co.in
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