September credit trends: Industry decline, agriculture and services rise

Credit expansion to the industrial sector slowed down in September, but it saw improvement in the agriculture and services sectors, according to data released by the Reserve Bank of India (RBI) on Tuesday.

The growth in personal loans also decelerated to 18.2 per cent year-on-year in September 2023, down from 19.4 per cent a year ago. This was attributed to a decrease in credit growth for housing, as reported by the central bank.

In September 2023, credit to the industrial sector increased by 6.5 per cent year-on-year, a decline from the 12.6 per cent growth observed in the same month the previous year. Amongst major industries, credit growth in basic metal and metal products, food processing, and textiles accelerated, while it decelerated for all engineering, chemicals and chemical products, and infrastructure.

Credit expansion for agriculture and related activities showed improvement, with a growth rate of 16.8 per cent year-on-year in September 2023, compared to 13.4 per cent a year ago.

The data from the RBI indicated that credit to the services sector grew by 21.3 per cent year-on-year in September 2023, up from 20.2 per cent the previous year. Non-banking financial companies (NBFCs) and trade were the primary contributors to this growth.

The information on the allocation of bank credit to different sectors for September 2023 was collected from 40 selected banks, accounting for approximately 93 per cent of the total non-food credit extended by all scheduled commercial banks.

(With PTI Inputs)