Growth in industry loans continued to be weak in November,rising just 13.7% y-o-y to Rs 23,72,300 crore,against an increase of 19.4% in the same period last year,latest RBI data revealed on Tuesday.
Credit to large industries grew 13.8% to Rs 19,34,200 crore compared to 20.8% in the year-ago period. Interestingly,credit growth in small and micro industries registered a higher growth of 22.4% y-o-y to R3,14,500 crore compared to the growth of 15.7% in 2012.
In mid-November,the RBI reclassified credit to medium manufacturing enterprises up to the credit limit of R10 crore as priority sector lending. Banks,realising this,have been aggressively lending to them, said SL Bansal,CMD,Oriental bank of Commerce.
Deceleration in credit growth was observed in most sub-sectors,barring rubber and plastic products,glass and glassware,vehicles,gems & jewellery and construction, the RBI release said.
Credit to the services sector grew 18.1% y-o-y to Rs 12,45,600 crore. Retail loans grew at a slower pace and showed a growth of 15.2% against a 16.4% growth in October. The housing loans segment grew the fastest in retail loans and increased 18.1% to Rs 5,12,100 crore against 15% in the year-ago period.
Bankers pushed their retail loans aggressively last month with demand coming in the festival season.
Non-food bank credit showed a sharp drop in growth to 14.7% y-o-y against an increase of 17.6% in November 2012. Credit growth had reached a year high of 18.4% in September following the RBIs extraordinary liquidity tightening measures in July. The measures drove up interest rates in the commercial paper market,forcing companies to turn to banks to finance their working capital needs.
Since then,liquidity restrictions have eased and interest rates on the marginal standing facility reduced to 8.75%,thereby prompting corporates to return to the commercial paper market.