Bank credit growth falls to 8.5% in January

MUMBAI: The bank's growth declined to 8.5% in January from 13.5% in the same period last year, led by a sharp slowdown in the services sector, according to RBI data. The growth of advances in the services sector slowed down to 8.9% from 23.9% in January 2019. (see chart) During the month, the personal loans segment grew by 16.9%. Within personal loans, the housing credit segment grew 17.5% from 18.4%, while education credit showed a negative growth of 3.1% compared to a negative growth of 2.3% in January 2019, data showed of RBI.

The growth of credit to the industry slowed to 2.5% of 5.2%. Within the industry, the growth of loans to paper and paper products, rubber plastic and its construction accelerated. However, the growth of credit for textiles, food processing, chemicals, basic metals and metal products, all engineering and infrastructure slowed, the RBI said.

According to the latest quarterly statistics on bank deposits and credit, the growth of bank loans slowed to 7.4% in October-December 2019 from 12.9% in the same period of the previous year. During the quarter, loans from public sector banks grew 3.7%, while loans from private sector banks registered a growth of 13.1%.

In February, the RBI governor said the slowdown in credit growth is the biggest challenge facing the banking industry. “The most important challenge for banks today, not only in India but also in other places, is to reduce credit collection. It affects the profitability of banks, ”said Das.

The Crisil rating agency, in a recent note, said credit growth is likely to be around 6% in this fiscal year, but is expected to accelerate to 8-9% in fiscal year 21. GDP The country grew to 4.7% in the December quarter, the slowest rate in more than six years.