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finance | IST

Bank credit pick up: Personal loans outpace business loans

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A pick up in bank loan disbursals is a key indicator of demand revival and higher consumer spending. Latest data from the government and RBI indicates that credit off take is on the rise and the personal loan segment is outpacing on most parameters.

A pick up in bank loan disbursals is a key indicator of demand revival and higher consumer spending. The latest data from the government and RBI indicates that credit off-take is on the rise and the personal loan segment is outpacing on most parameters.
More than 63,000 crore of loans were dispersed in the fortnight leading up to Diwali. The latest data from the ministry of finance shows that loans totalling 63,547 crore were sanctioned between October 16 and October 31 during the nationwide credit outreach program.
Of this, the largest chunk went to businesses followed by agriculture, housing also so about Rs 9,000 crore of loans being given out during this period followed by personal loans, vehicle loans and so on.
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Typically, the second half of the year is stronger with respect to credit growth, with the festive season and so on. The latest data from RBI shows that credit grew by 6.7 percent over the previous year, as of the end of September.
Personal loans grew the fastest outpacing the growth that we have seen last year. Loans to the agriculture sector also remained higher, loans to industry grew by 2.50 percent compared to 0.4 percent in the previous year, but the services sector slowed down a bit. Loans to this category grew by just 0.8 percent over the previous year, compared to the 9.2 percent growth that we had seen the year before.
Interestingly, the share of personal loans in the overall bank credit is perhaps for the first time ever overtaking the overall loans to the industry sector during the September quarter. The share of loans to industry dropped to 26 percent from 27 percent a year ago, whereas the share of personal loans which was a quarter of all bank loans as of last year now has increased to 27 percent and forms the largest chunk.
Over 29 lakh crore of personal loans were outstanding as of the end of September again, compared to about 28 lakh crore of loans to the industry. Loans to industry also fell because a lot of deleveraging has been happening whereas banks have aggressively been pushing housing loans besides other segments like auto and gold loans, leading to the kind of increase that we have seen.