Banks’ non-food credit growth slows to 11.8% in November

Advances to medium industry rose by 20 per cent in November 2024, as against 12 per cent a year-ago, the RBI data showed.

In November 2024, the overall bank credit, which consists of food and non-food credit, grew by 11.8 per cent, as against 16.3 per cent in the corresponding period of the previous year. The food credit grew by 22.9 per cent.

The non-food credit of banks stood at Rs 170.02 lakh crore (y-o-y) in November 2024, compared to Rs 152.05 lakh crore last year, the data of sectoral deployment of bank credit for November 2024 showed. These figures exclude the impact of the merger of HDFC Ltd with HDFC Bank, which came into effect from July 1, 2023.

Non-food credit is generally used as a gauge of bank lending. It is categorised into four broad categories – agriculture and allied activities; industry; services; and personal loans. Among these four, the credit offtake to personal loans segment has emerged as the prime driver of overall non-food credit growth in the past couple of years.

Bank advances to industry increased to Rs 37.98 lakh crore in November 2024 from Rs 35.12 lakh crore in the year-ago period. Advances to the micro and small segment stood at Rs 7.57 lakh crore and credit to the medium industry was at Rs 3.4 lakh crore as of November 2024.

“The heartening part of growth to industry is that there have been double digit growth rates registered for the MSME segment. In the case of the large industry, growth is at 6.1 per cent, higher than last year when it was 2.9 per cent,” a Bank of Baroda report said.

In the reporting month, growth in personal loans grew by 16.3 per cent (Rs 53.73 lakh crore) in November 2024, compared to a rise of 18.7 per cent (Rs 46.18 lakh crore) in the year-ago period.

Within personal loans, the housing loans (including priority sector housing loans) registered a growth of 18 per cent in November 2024, compared to a 14.8 per cent growth in the corresponding month of 2023.

The growth in credit card outstanding moderated to 18.1 per cent in November 2024, compared to a growth of 34.2 per cent in the corresponding month of the previous year. The RBI’s November 2023 step to increase risk weights on unsecured loans – personal loans and credit cards segment, in order to check the unprecedented growth, has helped in the moderation.

Vehicle loan segment also witnessed a moderation in growth at 10.3 per cent in November 2024, as against a growth of 20.6 per cent in the year-ago period.

Excluding the impact of merger, credit to agriculture and allied activities registered a growth of 15.3 per cent (y-o-y), as against 18.1 per cent for the corresponding month of the previous year, the data showed.

The growth in credit to the services sector was 14.4 per cent, compared to 22.2 per cent for the corresponding period of the previous year. The slowdown was primarily due to lower growth in credit to non-banking financial companies (NBFCs) (7.8 per cent in November 2024 vs 18.9 per cent last year same period) and trade segment (14.5 per cent vs 20.6 per cent).

However, credit growth (y-o-y) to commercial real estate (26.3 per cent vs 17.1 per cent) and computer software (22.5 per cent vs 5.6 per cent) accelerated, the RBI data showed.