New Delhi: The Reserve Bank of India (RBI) has highlighted that bank credit growth in 2023-24 has been broad-based, with the personal loan and services sectors leading the expansion. This was followed by credit growth in agriculture and the industrial sectors, the report noted.
The report said, “Bank credit growth in 2023-24 was broad-based, led by services sector and personal loans segment, followed by agriculture and industry”. The report also noted that RBI’s stricter lending norms of November have impacted segments such as consumer durables, credit card receivables, and loans to NBFCs, where risk weights were increased, leading to moderated credit growth in these areas.
“The shares of services and personal loans segments in total credit have grown from 21.9 per cent and 17.1 per cent, respectively, at end-March 2013 to 27.9 per cent and 32.4 per cent, respectively, at end-March 2024,” said the report. The report says that this shift underscores the increasing focus of banks on diversifying their credit portfolios to enhance profitability.
Regarding asset quality, the gross non-performing assets (GNPA) ratio varied across sectors. The agricultural sector had the highest GNPA ratio at 6.2 per cent as of September 2024, while retail loans recorded the lowest at 1.2 per cent. The industrial sector, however, has shown significant improvement in asset quality, with its GNPA ratio declining to 2.9 per cent in September 2024, continuing a positive trend since March 2018.
Education loans saw a notable decline in GNPA ratios, from 5.8 per cent in March 2023 to 2.7 per cent in September 2024. Despite this improvement, education loans continued to have the highest GNPA ratio among retail loan segments, followed by credit card receivables and consumer durables. The RBI report highlighted the importance of risk management and credit diversification as key strategies for banks to maintain growth and profitability while ensuring financial stability.