Non-Food Bank Credit

Retail credit growth fizzles out overall growth in bank credit.

Published monthly by Reserve Bank of India (RBI). Updated till May 2020 (Published on June 30, 2020).

Recent Data Trend

According to the data published by the RBI, growth in non-food bank credit slowed down to 6.8% YoY in May compared to 7.3% YoY in April 2020. Among the sectors, growth in credit to services sector and industries remained flat at 11.2% YoY and 1.7% YoY in May 2020. The credit growth for personal loans decelerated with a notable decline in credit to housing and vehicle loans.

Credit growth to personal sector narrowed to 10.6% YoY in May 2020 and continued to follow a downward trend which started in February 2020. With the nationwide lockdown in place since March, there has been demand only for essential items and the discretionary spending has taken a hit. Credit growth to consumer durables remained flat in the month of May 2020 at 43.5% YoY compared to 43.7% YoY in the pervious month. The lower pace of growth in credit to vehicle loans is also not a good sign for the already weak private consumption.

The slowdown in overall credit growth hints that even though the RBI had cut interest rates by 115 bps since February 2020 the transmission of the policy rate cut is yet to create demand for credit. Or the banks are still relectant to pass on the reduction in repo rate to retail consumers.

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

Note: The annual bank credit to sub-sectors has been updated as on March 29, 2019. Non-food bank credit and it's sub-sectors as a percentage to GDP for 2019 has been calculated using FY2018-19 GDP figure. 

Next Release Date:  July 30th, 2020