Bank lending growth slows to 11% in January, retail loans hit

Bank lending slowed year-on-year to 11 % in January this year compared to 20 % a year ago.

Loan growth has slowed across sector. Lending slowed across sectors- retail, services and agriculture in January. But lending to large industry rose 6.4 % compared to 5.7 % a year ago and medium firms rose 18.5 % compared to 10 % a year ago. Even loan against gold jewellery which is a part of banks' retail portfolio continued to spiral and rose 77 % y-o-y compared to 17 % a year ago.

Non- food credit rose 12.5 % (a three-month high) as compared to 16.2 % for the corresponding fortnight of the previous year (January 26, 2024).

Retail loans increased 14.2 % (y-o-y) as on the fortnight ended January 24, 2025, as compared with 18.2 % a year ago, largely due to decline in growth rate in ‘other personal loans’ or unsecured lending, ‘vehicle loans’ and ‘credit card outstanding’ segments. It may be recalled that the central bank had imposed higher risk weights on these loans to rein in the loan growth of these segments.

Credit to industry recorded a growth of 8.2 % (y-o-y) as on the fortnight ended January 24, 2025, compared with 7.5 % for the corresponding fortnight of the previous year. Among major industries, outstanding credit to ‘petroleum, coal products and nuclear fuels’, ‘basic metal and metal product’, ‘chemicals and chemical products’ and ‘all engineering’ recorded an accelerated growth.

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