The proportion of personal loans in scheduled commercial banks’ (SCBs) overall credit has increased from 25.94 per cent in 2021 to 27.29 per cent in 2022, per latest RBI data.

Personal loans include loans given to individuals and consists of (a) consumer credit, (b) education loans, (c) loans given for creation/ enhancement of immovable assets (e.g., housing, etc.), and (d) loans given for investment in financial assets (shares, debentures, etc.).

Among the six regions in the country, the Southern region (SR) accounted for the largest proportion of personal loans at 35 per cent in SCBs’ overall personal loans portfolio in 2022, followed by the Western region/ WR (26 per cent), Northern region/ NR (16 per cent), Central region/CR (12 per cent), Eastern region (9 per cent) and North-Eastern region/NER (2 per cent).

Further, personal loans accounted for 51 per cent of SCBs’ overall credit in NER (49 per cent in FY21), followed by CR and SR (32 per cent each), ER (30 per cent), WR (25 per cent) and NR (20 per cent), going by data in “Handbook of Statistics on Indian States 2021-22”.

Lower credit

According to experts, in the case of NER, the proportion of personal loans in SCBs’ overall credit has magnified (and is more than half) due to lower credit to industry and services.

Similarly, the proportion of personal loans in SCBs’ overall credit is lower in NR, WR, ER, CR and WR due to higher credit to industry and services.

As per RBI’s latest sectoral deployment of credit data, personal loans segment continued to grow strongly for banks, rising 19.6 per cent in September 2022 (13.2 per cent a year ago), largely driven by housingand vehicle loanssegments.

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