In today’s edition of our monthly newsletter, we look at the loans and deposit growth in the month of Oct’24.
We hope you enjoy reading this document and find it valuable.
Happy reading! 
Outstanding loans of scheduled commercial banks touched ~INR 172T in Oct’24, with retail loans accounting for 33% and loans to the services sector contributing 28%, making them the major contributors. Overall deposits touched ~INR 218T with Y-o-Y growth of ~12%
- Credit to agriculture and allied activities grew by 15.5% Y-o-Y in Oct’24, down from 17.4% in the same period last year. Credit growth to the industry sector increased to 8.0% Y-o-Y in Oct’24, compared to 4.8% a year earlier. Notably, major industries such as chemicals and chemical products, petroleum, coal products, nuclear fuels, and all engineering showed higher credit growth compared to last year.
- In the services sector, credit growth slowed to 14.1% Y-o-Y in Oct'2024, down from 20.4% last year, primarily due to reduced credit expansion for non-banking financial companies and the trade segment. However, credit growth for commercial real estate accelerated during the same period.
- The retail loans segment grew 15.8% Y-o-Y in Oct’24, down from 18.0% a year ago. This decline was driven by slower growth in other personal loans, vehicle loans, and credit card outstanding. However, housing loans—the largest segment within retail loans—experienced faster growth compared to the previous year.
Retail loan growth decelerated, with a 15.8% Y-o-Y increase in Oct’24 compared to 18.0% in the same period last year, with the outstanding retail credit reaching a value of ~INR 53T. In the Oct’24 monetary policy review, the RBI kept the repo rate unchanged at 6.5% for the tenth consecutive time. Despite the US Federal Reserve’s rate cut, the RBI maintained its focus on managing inflation within the target range, keeping home loan interest rates steady.
Students seeking a second education loan face stricter terms and higher interest rates as the RBI rejected banks’ request for leniency in restructuring education loans. Banks had sought to align the repayment of an existing loan with the moratorium of a second loan without it being treated as restructuring. However, the RBI’s refusal means such adjustments will increase credit risk and provisioning costs for banks, potentially leading to higher interest rates for students, where in Oct’24 the interest rates were between 11%-15% per annum.
Thank you for reading! Stay tuned for more updates next time!