Indian Banking Sector - Bank Loans To NBFCs And Other Personal Loans Moderate: Systematix

Systematix Report

Overall bank credit growth momentum improved to 20.6% YoY (16% YoY ex merger) with non-food credit growth of 21% YoY (16% YoY ex-merger). This was led by continued momentum in retail credit growth of 30% YoY (18.6% YoY ex-merger) and improvement in services credit growth to 25% YoY (22% YoY ex-merger) which was offset by tepid industrial credit growth of 6.6% YoY (6% YoY ex-merger).

Share of Industrial credit in total non-food credit continued to decline and was at 23.9% (ex-merger) as of November ’23 (versus 25% in FY’23 and 28-29% levels in FY19 and FY20) while the share of retail credit remained elevated at 31% in November ’23 (versus 25-26% levels in FY19 and FY20).

Key highlights were:

1. Growth moderation in bank loans to non- banking financial company's (21.5% YoY versus 30% average growth in FY23) and other personal loans (21.7% versus 24-25% levels in FY23) likely on the back of Reserve Bank of India's increase in risk weights (recent note) to curb unsecured credit growth.

2. Strong growth in commercial real estate and housing finance sector reflected in 20% YoY growth in non- priority sector lending housing loans (ex-merger), on a strong base, (versus 4% YoY growth in PSL housing and 15% YoY in overall housing loans).

Commercial real estate financing registered 16% YoY growth (ex-merger) versus 11% in Q1 ’24 and FY23.

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