Non-food bank loan increased by 16.7% in January, driven mostly by the services sector: RBI

According to information provided by the Reserve Bank of India, the growth of non-food bank loan in January was 16.7%, a significant increase above the 8.3% growth seen in the same month last year. According to data on Sectoral Deployment of Bank Credit in January, credit growth to agricultural and related sectors increased to 14.4% from 10.4%, while that to industry grew at 8.7% compared to 5.9% a year earlier. According to an announcement from the RBI, credit to the services sector increased by 21.5 percent YoY in January compared to 5.7 percent a year earlier. This increase was primarily the result of better credit offtake by non-banking financial institutions.

Personal loan growth also picked up, increasing to 20.4 percent from 12.8 percent a year earlier, mostly due to housing and auto loans, it was stated. Regarding credit to the industrial sector, lending to large industries increased by 6.5%, a significant increase from 0.2% a year ago. However, loan growth to medium-sized businesses fell to 18.1% from 52.4%, while credit growth to micro- and small-sized businesses decreased to 15.2% from 23.3% in January 2022.

Over the course of a year, loan growth increased in industries like basic metal and metal products, beverage and tobacco, cement and cement products, chemicals and chemical products, food processing, glass and glassware, mining and quarrying, petroleum, coal products, and nuclear fuels, vehicles, vehicle parts, and transport equipment, as well as wood and wood products.

Adversely, credit to industries like engineering, construction, gems and jewellery, infrastructure, leather and leather-related products, paper and paper-related products, rubber and plastics, and their products, as well as textiles, slowed down.

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