Scheduled commercial banks (SCBs) ended FY24 with a higher non-food bank credit growth of 16.3 per cent against 15.4 per cent in FY23. This growth excludes the impact of the July 2023 merger of HDFC with HDFC Bank.

Credit growth in the year gone by was propelled by demand from sectors such as agriculture and allied activities, industry and services.

Personal loans

However, personal loans growth moderated. This came in the wake of RBI increasing the risk weights (in November 2023) in respect of consumer credit exposure of commercial banks (outstanding as well as new), including personal loans (excluding housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery) and credit card receivables exposures by 25 percentage points.

SCBs’ credit growth to agriculture and allied activities was robust at 20.1 per cent (y-o-y) in March 2024 (15.4 per cent a year ago), per RBI’s statement on sectoral deployment of bank credit.

Credit to industry grew by 8.5 per cent (y-o-y) in March 2024 as compared with 5.6 per cent in March 2023.

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

The central bank said credit growth to services sector improved to 20.2 per cent (y-o-y) in March 2024 (from 19.6 per cent a year ago), with higher growth in credit to ‘transport operators’ and ‘commercial real estate’.

Credit growth to ‘non-banking financial companies (NBFCs)’ and ‘trade’, however, decelerated in March 2024 as compared with March 2023.

Personal loans growth moderated to 17.7 per cent (y-o-y) in March 2024 (21.0 per cent a year ago) due to decelerated growth in vehicle loans and other personal loans.