In today’s edition of our monthly newsletter, we look at the loans and deposit growth in the month of Sept’24.
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Outstanding loans of scheduled commercial banks touched ~INR 171T in Sep’24, with consumer loans accounting for 33% and loans to the services sector contributing 28%, making them the major contributors. Overall deposits touched ~INR 215T with Y-o-Y growth of ~11%
- Credit to agriculture and allied activities maintained strong momentum, growing by 16.4% Y-o-Y in Sep’24, slightly lower than the 16.7% growth recorded in Sep’23.
- Credit growth to the industrial sector improved significantly, reaching 9.1% Y-o-Y in Sep’24, up from 6% in the previous year. This growth was widespread across micro & small, medium, and large industries. Among key industries, credit to sectors like chemicals and chemical products, food processing, petroleum, coal products, nuclear fuels, and all engineering saw higher growth compared to the previous year. However, credit growth to the basic metal and metal product and textiles sectors moderated.
- The services sector experienced a slowdown in credit growth, which declined to 15.2% Y-o-Y in Sep’24 from 21.6% a year earlier. This was mainly due to reduced credit growth to NBFCs. Nonetheless, credit to commercial real estate within the services sector showed accelerated growth during the same period.
Growth in retail loans also moderated, decreasing to 16.4% Y-o-Y in Sep’24 from 18.2% in Sep’23. This decline was driven by slower growth in segments such as personal loans, vehicle loans, and credit card outstanding. However, housing, the largest component of retail loans, recorded faster growth.
Retail loan growth decelerated, with a 16.4% Y-o-Y increase in Sep’24 compared to 18.19% in the same period last year as the new LCR regulations mandate that banks apply an extra 5% run-off factor to retail deposits with internet and mobile banking capabilities. This means banks will need to hold more high-quality liquid assets, leading to a reduction in available funds for lending.
Thank you for reading! Stay tuned for more updates next time!