Fresh loans to industry in FY23 are lower than what were extended by banks to agriculture, services or the personal loan segment during the fiscal. This reflects the declining share of manufacturing in the economy.
According to data released by the Reserve Bank of India (RBI) in its report on sectoral deployment of credit, banks have lent Rs 1,76,360 crore to the agriculture segment (see graphic). This is 35% less than the Rs 2.7-lakh-crore additional credit banks have provided to non-banking finance companies in the current fiscal.
Banks have grown their advances by Rs 14.5 lakh during the current financial year to Rs 133.4 lakh crore – an increase of 12% in the first 10 months of FY23. Of this, Rs 5.7 lakh crore, which is 39.4% of the incremental credit this year, was bank loans for personal finance. Loans to individuals, which was the main driver of bank credit last year, continue to dominate this year as well.
Over a third of incremental credit has gone to the services sector. The share of the loans to the services segment has also increased, following a healthy 15.5% growth in this segment due to the opening up of high-contact segments after the pandemic. Services now account for 26.1% of bank credit compared to 24.4% recorded earlier.
Personal loans have grown at 16.9% in the first 10 months, increasing their share in non-food credit to 29.8% in end-January 2023 from 28.6% as of end-March 2022. Total outstanding personal loans now account for 29.8% of bank credit, of which 14.2% is home loans alone.
Within the personal loan segment, the fastest-growing advances are those against shares and other securities. This segment grew by 31%. Credit card outstanding grew by 25.9% during the current fiscal to Rs 1.9 lakh crore as of end-January.