Personal loans boost credit growth in May

Outstanding personal loans as of May 20 at 34.67 trillion rupees remained higher than outstanding credit to industry at 31.65 trillion rupees and service sector at 30.43 trillion rupees, according to data from the Reserve Bank of India (RBI). The personal loans segment maintained an upward trend in May, rising 16.4%, off the back of a high base of 12.8% a year ago, mainly driven by the home and auto loan segments.

Home and auto loans, which make up the bulk of personal loans, saw a 14% increase, according to RBI data.

Outstanding housing loans (including priority sector), as of May 20, stood at Rs 17 trillion out of total outstanding personal loans of Rs 34.7 trillion, while outstanding auto loans was 4.2 trillion. Loans taken out against gold jewelry saw a decline and personal loans taken out holding gold as collateral fell 2.9%, even as all other categories of personal loans showed improvement, revealed the data. Banks approved loans of up to Rs 73,752 crore in May against gold jewellery. Loans issued against gold had jumped 126% during the second wave of the pandemic, between May 2020 and May 2021.

Credit to the services sector accelerated to 12.9% in May from a relatively weak 3.4% a year ago, mainly due to improved drawdowns by non-bank financial corporations (NBFCs) .

While non-food bank credit increased by 12.6% year-on-year in the month under review, this is a low base of 4.9% a year ago. There has been a reasonably good recovery in industrial credit growth, which accelerated to 8.7% in May 2022, albeit from a very low base of 0.2% in May 2021.

Interestingly, credit to large industries grew by just 1.9% after contracting 3.1% in the same period last year, suggesting that large companies are generating adequate cash flow. , and also that the demand for loans has not really increased. too much momentum. On the other hand, the growth of credit to micro and small industries accelerated to a healthy 33% against 8.9% a year ago.

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