Public Sector Banks (PSBs) have continued to lose ground in India’s credit market, with their share in total credit declining to 53.1% as of June 2024, down from 55.8% a year earlier, according to the Reserve Bank of India’s (RBI) latest quarterly data. In contrast, Private Sector Banks have steadily gained market share, with their share in total credit rising to 46.9% from 36.5% in March 2021.
Bank credit growth, on a year-on-year basis, slowed slightly to 15% (excluding the impact of the HDFC-HDFC Bank merger) in June 2024, compared to 15.6% in the previous year. Meanwhile, bank deposit growth moderated to 11.7% (net of merger impact) from 13.1% in the previous quarter.
The private corporate sector saw an increase in its share of total bank credit, rising to 26.4% in June 2024 from 25.7% a year earlier, as loan growth accelerated across successive quarters. Households continued to account for the largest share of total credit at 46.5%, with the share of female borrowers gradually increasing to 10.9% from 10.3% in the previous year.
The data also revealed a decrease in borrowings by public sector entities, with their share in total credit falling to 13.5% in June 2024, down from 16.4% a year earlier. Although bank credit to industry is showing signs of gradual acceleration, it still lags behind the overall credit growth rate.
Shift in deposit trends
The data also highlights a shift in deposit trends within Scheduled Commercial Banks (SCBs). The share of deposits offering interest rates of 7% and above surged to 66.9% in June 2024, up from 45.4% a year ago. This shift towards higher-yielding deposits has led to increased accruals in term deposits, while the share of savings deposits in total deposits decreased to 29.8%, down from 30.1% a quarter ago and 31.8% a year earlier.
Metropolitan branches, which account for the majority of bank loans, saw their share in total credit dip to 60.6% in June 2024 from 62.0% a year earlier, as urban and semi-urban branches reported higher growth in bank loans.
The Weighted Average Lending Rate (WALR) across banks rose marginally to 10.23% in June 2024, compared to 10.18% in the previous quarter and 10.15% a year earlier, reflecting a slight increase in borrowing costs.shr
