Non-Food Bank Credit

Improved credit growth in agricultural and industrial sectors in March 2019.

Published monthly by Reserve Bank of India (RBI). Updated to March 2019 (Published on April 30th, 2019)

Recent Data Trend

Growth in the non-food bank credit (NFBC) reached 12.3% year on year (YoY) in March 2019, compared to 8.4% YoY in March 2018. The credit to the industrial and agricultural sector saw an increase. In comparison to last month's growth in the overall non-food bank credit, we see a decline from 13.2% in February 2019 mainly because of a fall in credit to services and personal loans.

In March 2019, the industrial loans recorded a growth of 6.9% YoY, higher than the 0.7% YoY growth in the corresponding month a year ago. Since the last eight months, credit growth to micro, small, medium and large industries has been improving, a good indication for the economy's industrial investment. The improvement in credit to industrial sector should help in speedy recovery in industrial output and thereby bring about a recovery in the last quarter growth for FY19.

The fall in growth for the NBFC in March 2019 was led by a decline in credit to the services sector (17.8% YoY) and personal loans (16.4% YoY). The housing loans grew by 10.5% YoY while vehicle loans grew by 4.7% YoY. This explains that consumer demand remains weak in the last quarter of FY19. The credit to agricultural sector saw an improvement to 7.9% YoY, higher than the year-ago growth.

The previous quarter did see a slowdown in investment demand which propelled the real GDP growth to a six-quarter low of 6.6% YoY. If there is no sustained recovery in the industrial investment one needs to check where the improvement in credit to industries is going.

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:  May 31st, 2019