Credit Growth To Industry down to 5.2% in July 2023

New Delhi, Sept 1 (KNN) On year to year basis, the Bank credit growth declined to 14.8 per cent in July 2023 when compared to 15.1 per cent a year ago due to deceleration in credit demand from industry and personal loan segments, RBI said on Thursday.

The Industry credit growth slow down to 5.2 per cent (y/y) in July 2023, compared to 10.5 per cent in July 2022.

However, demand for credit from sectors such as agriculture and allied activities, and services was robust. Credit growth to agriculture and allied activities improved to 16.8 per cent (y-o-y) in July 2023 from 13.2 per cent a year ago.

Amongst major industries, credit growth (y-o-y) to basic metal & metal products and textiles accelerated in July 2023 when compared to the corresponding month of the previous year.

Whereas, the Credit growth to chemicals & chemical products, food processing and infrastructure decelerated.

Personal loans growth declined to 18.4 per cent (y-o-y) in July 2023 (18.7 per cent a year ago), supported by ‘housing’ and ‘vehicle’ loans.

Credit growth to services sector accelerated to 19.4 per cent (y-o-y) in July 2023 from 16.7 per cent a year ago, primarily due to ‘trade’ and ‘commercial real estate’.

CARE Ratings in it’s report said that the outlook for bank credit offtake remains positive, supported by factors such as economic expansion, increased capital expenditure, the implementation of the PLI scheme, and a push for retail credit.

The rating agency estimates that credit growth is likely to be in the range of 13.0-13.5 per cent for FY24, excluding the impact of HDFC’s merger with HDFC Bank, reported Hindu Businessline.

“The personal loan segment is expected to perform well compared to the industry and service segments in FY24. However, elevated interest rates and global uncertainties could potentially impact credit growth in India,” it said.

Deposit growth is expected to improve in FY24 as banks look to shore up their liability franchise and ensure that deposit growth does not constrain the credit offtake, it added.  (KNN Bureau)