Loans rise across industry, agriculture, retail and services sectors

Bank credit rose across all - Industry, agriculture, retail and services sectors this fiscal despite rise in rates.

On a year-on-year (y-o-y) basis, non-food bank credit rose 15.9 per cent in February 2023 as compared with 9.2 per cent a year ago according to the latest data released by the Reserve Bank

" Bank credit rose across all sectors this fiscal despite rise in rates, the latest data released by the Reserve Bank" said Madan Sabnavis, chief economist, Bank of Baroda. " On the whole it appears that the increase in repo rate may not have drastically brought down the pace of growth in credit. The impact has been more on the periphery so far ". The weighted average lending rate (WALR) on fresh rupee loans of SCBs increased by 24 basis points (bps) from 9.00 per cent in January 2023 to 9.24 per cent in February 2023, the latest RBI data indicated.

Credit to industry rose 7.0 per cent (y-o-y) in February 2023 as compared with 6.7 per cent in February 2022. Size-wise, credit to large industry rose by 5.0 per cent as compared with 0.9 per cent a year ago. Credit growth of medium industries was 13.5 per cent as against 53.8 per cent. Credit to micro and small industries registered a growth of 13.2 per cent in February 2023 (24.0 per cent a year ago), RBI said.

Retail loan growth accelerated to 20.4 per cent (y-o-y) in February 2023 from 12.5 per cent a year ago, driven by housing loans.

Credit growth to services sector was robust at 20.7 per cent (y-o-y) in February 2023 as compared with 6.2 per cent a year ago, primarily due to higher loans to ‘Non-Banking Financial Companies (NBFCs)’.

Credit to agriculture and allied activities rose by 14.9 per cent (y-o-y) in February 2023 as compared with 10.3 per cent a year ago.