Credit to industry experienced a sharp rise of 10.2% year-on-year (Y-o-Y) in July 2024, up from 4.6% in July 2023, indicating strong economic growth, according to data from the Reserve Bank of India (RBI).
Non-food bank credit also saw an increase, growing by 15.1% in July 2024, compared to 14.7% in the same period last year.
In contrast, retail loan growth slowed to 17.8% Y-o-Y in July 2024 from 18.4% a year earlier, driven primarily by a decline in the personal loan segment and vehicle loans.
The rise in loan offtake was evident across all three key industry segments—micro and small, medium-sized, and large industries. Loans to large industries grew by 8.5% Y-o-Y in July 2024, a significant jump from the 3.5% growth observed a year earlier. The medium-sized segment witnessed a robust 17.2% Y-o-Y growth, up from 9.8%, while the micro and small segment saw credit growth rise to 13.3% Y-o-Y, compared to 9.9% in July 2023.
Credit flow to commercial real estate, tourism, hotels, restaurants, and computer software sectors accelerated during the same period.
Loan growth in agriculture and allied activities remained robust, posting an 18.1% Y-o-Y increase in July 2024, up from 16.7% in July 2023, the RBI data revealed.
Among major industries, chemicals, food processing, and infrastructure saw higher Y-o-Y credit growth in July 2024, while credit growth in basic metal and metal products and textiles moderated.
Personal loans fall
Growth in the “other personal loan” category, which mainly includes unsecured credit, fell sharply to 14.5% Y-o-Y from 25% in July 2023. However, credit growth in the housing segment, the largest constituent of retail loans, accelerated to 19.1% Y-o-Y in July 2024, up from 12.9% a year ago. It is important to note that these credit growth figures exclude the impact of the HDFC-HDFC Bank merger.
Credit to the services sector also moderated, growing by 15.4% Y-o-Y in July 2024, compared to 19.7% a year earlier. This slowdown was primarily driven by lower credit growth in non-banking financial companies (NBFCs) and trade segments. Credit to NBFCs increased by 12.7% Y-o-Y in July 2024, down from 19.9% a year ago, while credit to the trade sector declined to 15.2% from 18.1% in July 2023.
