Non-Food Bank Credit

Sluggish pace of credit growth to industrial sector in December.

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

Recent Data Trend

Non-food bank credit (NFBC) grew at a moderate pace of 7.2% year-on-year (YoY), compared to the 8.3%% YoY growth in November 2019. Personal loans and credit to industrial sector showed a slowdown in growth. Credit to service sector saw a steady expansion as it inched up to 6.2% YoY. 

The subdued growth of industrial credit (1.6% YoY) continued into the second consecutive month though it had seen a marginal uptick in October 2019. This may continue until capital expenditure picks up at a consistent pace. Judging by sectors, industries like infrastructure, basic metals and food processing saw a contraction in receipt of credit.

Additionally, credit to personal loans contracted to 15% YoY with loans to housing and consumer durables showing a fall in growth. Growth in credit to services, on the other hand, maintained an overall expansion and increased by 6.2% YoY from 4.8% YoY in the previous month. 

In terms of the October-December quarter, bank credit growth stood at 7% YoY as compared to 8% in the previous quarter. The growth in bank credit has been witnessing a downward trend since April-June quarter 2019 and it remains below the credit growth performance during mid 2008-2018. The moderate pace of credit flow is reflected in slowdown of industrial output in the recent past. Thus leading to a slowdown in the economy. The budget should be an opportunity for the government to address issues such as capital requirement for the banks. For growth to resume, banks will need to be funded well so that lending to industries can resume.

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:  February 28th, 2020