Non-Food Bank Credit

Non-food bank credit slowed down to a 7-month low of 11.9% YoY in April 2019.

Published monthly by Reserve Bank of India (RBI). Updated to April 2019 (Published on May 31st, 2019)

Recent Data Trend

India's non-food bank credit saw a moderation in the first month of the new financial year. The pace of non-food loan growth slowed down to a 7-month low of 11.9% YoY in April 2019. The moderation in loan growth is primarily on account of a slowdown in credit to personal loans and services sector which together accounted for more than half of total non-food bank credit. The growth in credit to services sector witnessed a 13-month low of 16.8% YoY and the personal loans recorded a 7-month low of 15.7% YoY in April 2019.

Within the personal loan segment, the consumer durables loan disbursement saw a further contraction by 68% YoY in April 2019. Loans to Housing as well as vehicles segment further saw a weak credit growth of 18.6% YoY and 4.9% YoY in April as against 19% YoY and 6.5% YoY in the previous month, respectively. This explains the lower growth in consumer goods, real estate and the automobile sector. Within the services sector, the NBFCs continues to bag a larger share of the credit (around 27% in April) which shot up by 37.8% in April as against 29.2% YoY in the last month. This reflects a shift in NBFCs focus from money markets to banks for funds amid tighter liquidity conditions.

The credit growth to industry and agriculture sector remained flat at 6.9% YoY and 7.9% YoY in April 2019, respectively. While the growth in credit to large industries saw a slight decline, micro, small and medium industries saw a modest improvement in their credit growth as compared to the previous month figures. Loans to micro and small industries increased by 1% YoY and that of medium industries by 3.5% YoY in April as against 0.7% YoY and 2.6% YoY in the previous month, respectively.

We believe that bank lending to personal loan segment needs to accelerate in order to offset the adverse impacts of liquidity crunch in NBFCs, a major player in the personal loan segment. A pick-up in consumption is crucial to get back GDP to a high growth trajectory, which requires reviving the credit channels to this segment.

Brief Overview

The Bank credit in India refers to credit lending by various scheduled commercial banks (SCBs) to various sectors of the economy. The bank credit is categorized into food credit and non-food credit. The food credit indicates the lending made by banks to the Food Corporation of India (FCI) mainly for procuring foodgrains. It is a small share of the total bank credit. The major portion of the bank credit is the non-food credit which comprises of credit to various sectors of the economy (Agriculture, Industry, and Services) and also in the form of personal loans.

The data on bank credit is collected on a monthly basis by the Reserve Bank of India (RBI). The data is sourced from 46 commercial banks, accounting for about 95% of the total non-food credit deployed by all scheduled commercial banks (SCBs).

Since September 2016, credit to the industry has been slowing down, contracting by 1.7% for the first time in October 2016. The fall in credit to the industrial sector can be partly attributed to the twin-balance sheet problem (highly indebted companies and banking system plagued with rising NPAs) and partly due to a slowdown in credit demand post demonetization.

For further information, please visit the official government website.

Bank Credit to sub-sectors-Quarterly

Bank Credit to sub-sectors-Annual

Next Release Date:  July 1st, 2019