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Updated December 28th, 2023 at 20:35 IST

Banks posted robust credit growth driven by personal loans: RBI

Within industry, the reduction in the GNPA ratio of large industries from 22.9 per cent at end-March 2018 to 4.6 per cent at end-June 2023 was noteworthy.

Business Desk
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rbi report | Image:ani
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The bank credit growth in 2022-2023  was robust and strong led by personal loans and credit extended to the services sector, within personal loans, the growth in credit card receivables, which are a form of unsecured lending, rose sharply. Services sector credit was driven by lending to NBFCs, the RBI said in its report on Wednesday. 

The report also said that credit to micro and small enterprises had accelerated during 2020-21 and 2021-22, reflecting benefits under the “Emergency Credit Line Guarantee Scheme (ECLGS) launched in May 2020. Although the growth rate decelerated subsequently, it remained higher than the credit growth to large industries,” the apex bank said. 

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Within industry, the reduction in the GNPA ratio of large industries from 22.9 per cent at end-March 2018 to 4.6 per cent at end-June 2023 was noteworthy.

Reversing the existing trends over the last four years, the PSBs’ credit growth to the MSME sector in 2022-23 exceeded that of private sector banks. This led to an increase in the former’s share in total MSME credit from 47.5 per cent in 2021-22 to 48.0 per cent in 2022-23. The average amount of loans extended by PVBs was almost double that of PSBs, the report mentioned.

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In recent years, private banks overall credit growth was higher than that of PSBs. As a result, PVBs were required to accelerate their priority sector lending to meet regulatory requirements. During 2022-23, total priority sector advances grew by 10.8 per cent, led by PVBs (growth rate of 15.7 per cent). In comparison, the priority sector lending of PSBs grew by 7.1 per cent. 

On priority sector lending, the report highlighted that all bank groups managed to achieve their overall priority sector lending targets. “However, shortfall was found in non-corporate individual farmers sub-category by FBs10, and PVBs fulfilled their target only for micro enterprises. Growth in the amount outstanding under operative kisan credit cards (KCC) decelerated in 2022-23 to 8.8 per cent. The slowdown was mainly contributed by northern and eastern regions,” the RBI said.

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Banks credit to sensitive Sectors like  real estate and capital markets – rose at a faster pace during 2022-23 and accounted for 24.3 per cent of their total loans and advances. Lending to the real estate sector picked up for both PSBs and PVBs.

 

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Published December 28th, 2023 at 20:35 IST

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