Non-Food Bank Credit

A weak credit growth to industries signifies further deterioration ahead for India's industrial production.

Published monthly by Reserve Bank of India (RBI). Updated till November 2019 (Published on December 31, 2019).

Recent Data Trend

The growth in outstanding non-food credit disbursed by scheduled commercial banks (SCBs) slowed down to 7.2% year-on-year (YoY) in November 2019 from 8.3% YoY in the pervious month. The slow down in non-food credit growth was visible across all the major sectors (industrial, personal and services).

Credit growth to industries narrowed to 2.4% YoY in November 2019 compared to 3.4% YoY in October 2019. The growth in credit to industrial segment continues to follow a downward trend which started in August 2019, although there was a marginal uptick in October 2019. Among the sub-components in this sector, credit growth to large industries (with a share of 80% within industrial segment) performed poorly in the month of November. Credit growth to major industrial sub-sectors such as infrastructure, construction, textiles continued to fall. This therefore indicates that the upcoming IIP (measure of infrastructure output) data for November 2019 is less likely to show signs of recovery.

Along with this, growth in personal loans remained resiliant, however it marginally fell to 16.3% YoY in November 2019 compared to 17.2% YoY in the pervious month. The disbursal of credit to personal vehicles happened at a slower pace of 4% YoY in November which is not a good sign for the already weak private consumption. It is important that we see a pick up in personal loans as private consumption will be a major engine for economic growth.

Thus, the subdued credit growth further reflects continuous muted demand in the economy. This slowdown also hints that the transmission of rate cut by the RBI  of 110 bps in this fiscal year has not worked in favour of creating more demand for credit.

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:  January 30th, 2020