Personal loans account for 96% of new bank loans during FY18: RBI data

Personal loans account for 96% of new bank loans during FY18: RBI data
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Mumbai, Apr 20: In a first, personal loans are set to account for most of incremental growth in non-food bank credit during 2017-18.
According to the Reserve Bank of India (RBI) data on sectoral deployment of bank credit, personal loans, which include home, vehicle and education loans, accounted for a record 96 per cent of incremental non-food credit in the last financial year till February 16. This is more than double their share in incremental bank credit growth in the previous two years.
Personal loans accounted for 41.6 per cent and 41.5 per cent of incremental credit growth during FY17 and FY16, respectively, (see the adjoining chart). Sectoral RBI data for all of FY18 is not available yet.
Analysts attribute this largely to a slump in fresh investment by the corporate sector, hitting industrial credit demand. “This is not surprising given the recent trend in bank credit where corporates have nearly stopped taking loans and retail credit is now the only major segment that is growing for banks,” said Dhananjay Sinha, head of research, Emkay Global Financial Services.
Sinha expects the trend to persist for at least a few more quarters in view of the slump in capital expenditure by the corporate sector. “There is not much of a demand for industrial credit right now, but households and individuals continue to take fresh loans as the services sector (of the Indian economy) continues to grow,” he added.
Personal loans account for 96% of new bank loans during FY18: RBI data Upward trajectory: Incremental growth in bank’s personal loans and share in non-food credit
Non-food credit was up by Rs 2.44 trillion during the first 10-and-a-half months of FY18, ended February 16, 2018. Of this, Rs 2.34 trillion was accounted for by personal loans. This translated into annualised growth of 17.6 per cent in personal loans during FY18.
According to the RBI’s classification, loans for consumer durables purchases, vehicle/car loans, education loans, credit card debt, loans against bank fixed deposits, loans against shares and other personal loans are all clubbed as personal loans.
In comparison, credit to industry was down by Rs 528 billion during the period, while credit to the agriculture and allied sector was up by Rs 244 billion.
Personal loans account for 96% of new bank loans during FY18: RBI data Total non-food credit was up by Rs 5.48 trillion during FY17, of which Rs 2.61 trillion was accounted for by personal loans.