Banking Sector Maintains 15% Loan Growth Despite Slowdown in Services and Personal Loans in August

Banking Sector Maintains 15% Loan Growth Despite Slowdown in Services and Personal Loans in August

The banking sector's loan growth held steady at 15% year-on-year (YoY) in August 2024, despite a noticeable slowdown in services and personal loan segments. This growth figure excludes the impact of the recent HDFC merger with HDFC Bank, as per the Reserve Bank of India’s (RBI) data on sectoral deployment of bank credit.

Personal loan growth, a key driver in consumer lending, decelerated to 16.9% YoY in August, down from 18.3% in the same period last year. This slowdown was primarily driven by a reduced growth in 'other personal loans' and 'vehicle loans.'

Similarly, credit growth in the services sector slowed to 15.6% YoY in August 2024, compared to a more robust 21% in August 2023. The deceleration in services was attributed to slower lending to non-banking financial companies (NBFCs) and the trade sector. However, credit expansion in 'commercial real estate' and 'computer software' showed an uptick during the month.

Meanwhile, industrial credit posted stronger growth, climbing to 9.8% YoY in August 2024, up from 5.3% YoY in the same month last year. Key industries such as chemicals, food processing, petroleum, coal products, and infrastructure experienced higher growth rates, while credit to the basic metals and textiles sectors slowed.

Agricultural and allied activities continued to show robust growth, with credit expansion reaching 17.7% YoY in August 2024, compared to 16.5% in August 2023.

The data, drawn from 41 select scheduled commercial banks, represents about 95% of total non-food credit deployed by all scheduled commercial banks.