An accelerated rise of 19.7% was witnessed in the gross bank credit offtake on a year-on-year (y-o-y) basis in July, a recent report by CareEdge stated.
The growth was driven by services and personal loans with personal loans reporting a sustained growth at 31.7% y-o-y in July compared to 18.7% a year ago, and the services segment reported a robust rise of 23.1% y-o-y as compared with 16.7% in July last year.
However, the report stated that the NBFCs declined sequentially as HDFC’s borrowings were reclassified. Industry moderated at 5.8% y-o-y in July 2023 from 10.5% over the year-ago period due to slow growth in MSME and muted growth in infrastructure.
As of July 28, 2023, banks’ credit to NBFCs stood at 13.8% marking a decline of 2.8% from the last month.
Banks’ outstanding to NBFCs falls
As per the CareEdge report, the banks’ outstanding to NBFCs fell m-o-m as HDFC’s borrowings were reclassified.
The lending to NBFCs grew by 23.6% y-o-y in July 2023 from a growth of 24.6% in July 2022.
Meanwhile, the growth continues to be driven by healthy loan disbursements reported by NBFCs for their dependency on the banking system especially by the smaller NBFCs.
“The growth in services is largely driven by NBFCs, if NBFCs were excluded, the credit growth would have been lower but would have remained robust at 22.9% on a y-o-y basis,” the report highlighted.
The credit outstanding of the industry segment registered a moderation in growth at 5.8% y-o-y in July 2023 from 10.5% in the year-ago period.
MSME credit growth slowed from 30.6% y-o-y in July 2022 to 10.1% y-o-y in July 2023 due to a high base. The credit to large industries rose by a slower 5.8% y-o-y from 10.5% in July 2022.
The report highlighted that the lower growth is despite a small push received by the HDFC-HDFC Bank merger. If the merger impact is excluded, growth would have an even slower at 5.2%.
