Personal loan growth is skyrocketing; Services, industry credit catch-up

By Shashank Didmishe

Personal loans remain the main driver of non-food credit growth for banks, with the segment consistently posting double-digit growth so far this year. Loans to the services sector and loans to businesses also continue to show growth drivers.

Outstanding personal loans from banks stood at 35.2 trillion rupees as of June 17, up 18% year-on-year, according to data from the Reserve Bank of India (RBI). The segment experienced mechanical growth of almost 2 percentage points on a monthly basis between April and June.

Analysts and bankers said personal loan growth will continue to improve in the current fiscal year. A group of private sector banks and some public sector banks saw a significant improvement in personal lending in the first quarter. HDFC Bank and ICICI Bank recorded personal loan growth of 22% and 38%, respectively.

Personal loans constitute nearly 30% of the total outstanding non-food loans as of June 17.

In comparison, outstanding bank loans to the services sector moderated slightly to 12.8% in June against 12.9% in May. As of June 17, the total outstanding amount of the services sector stood at 30.7 trillion rupees. Bank loans to NBFCs account for nearly 40% of the total outstanding debt of the services sector. Bank lending to NBFCs improved by 20% in June to Rs 11 trillion.

Outstanding loans to industry increased by 9.5% in June, loans to micro and small industries increasing by 29% and to medium-sized industries by 47.6%.

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