Banks Lent More to NBFCs Than Home Buyers in First Half, Gold Loans Still Driving Retail Credit

Bank lending patterns have changed noticeably in the first half of the financial year, with banks lending more to non-banking financial companies than to home buyers. During the period, banks gave NBFCs loans worth Rs 1.8 lakh crore, compared with Rs 1.4 lakh crore for housing. Gold loans, meanwhile, remained a major contributor to retail credit growth.

Between 31 March and 30 September, total incremental non-food credit stood at Rs 16.1 lakh crore. Industry accounted for Rs 3.7 lakh crore of that, while the trade sector took loans of Rs 1 lakh crore, pointing to strong demand in corporate and service segments.

Non-food credit outstanding crosses Rs 229 lakh crore

Scheduled commercial banks' non-food credit outstanding rose 19.1 percent year on year to Rs 229 lakh crore by the end of September, up 7.5 percent from March. Of the incremental lending, services accounted for Rs 4.9 lakh crore, personal loans for Rs 4.5 lakh crore, industry for Rs 3.7 lakh crore and agriculture for Rs 1.8 lakh crore.

Gold loans jumped 82.5 percent year on year to Rs 5.8 lakh crore, rising 25.1 percent in the first six months alone, with banks giving Rs 1.2 lakh crore in gold loans between March and September. Within services, loans to NBFCs rose 41.8 percent year on year to Rs 22.5 lakh crore, while commercial real estate advances grew 23.3 percent to Rs 7.5 lakh crore.

The largest recipients of incremental lending, in Rs crore, were: large industries 2,04,028; NBFCs 1,83,114; housing 1,35,971; gold loans 1,15,827; trade 1,02,749; micro and small industries 91,366; other personal loans 90,221; and commercial real estate 75,022.

Services, industry and personal loans all grow

Trade credit grew 23.9 percent, while credit to the services segment rose 28.3 percent to Rs 64.9 lakh crore, accounting for 30.6 percent of incremental non-food lending. Industrial credit rose 19.5 percent to Rs 49.8 lakh crore, with loans to large industries up 16 percent to Rs 33 lakh crore. Lending to medium-sized companies rose 33.2 percent and loans to small companies grew 24.4 percent.

Credit for agriculture and allied activities rose 19.5 percent to Rs 28.2 lakh crore, from Rs 23.6 lakh crore a year earlier. Personal loans grew 17.3 percent to Rs 74.27 lakh crore, with the fastest-growing segment being loans against fixed deposits, where outstanding advances rose 53.3 percent to Rs 2.2 lakh crore, up 28.1 percent in six months, during which banks gave Rs 47,471 crore in such loans.