Bank loans to industry and services grow, retail lags in February

On a year-on-year basis, non-food bank credit climbed 16.5% in February, as compared with 15.9% a year ago, according to the latest Reserve Bank of India (RBI) data on sectoral deployment of bank credit.

Loans to real estate recorded a four-fold increase, while loans to services also accelerated. Loan growth to industry also increased at a faster pace than in the previous year.

Credit to the services sector grew 21.2% (YoY), compared with 20.5% a year ago. Among major contributors to growth were 'trade' and 'commercial real estate', while loans to NBFC decelerated.

On a year-on-year basis, loans to commercial real estate rose 37.9% in February compared to 8.9% a year ago. Excluding the merger impact of HDFC with HDFC Bank, the loan growth rate more than doubled to 21% during the month.

Credit to industry grew by 8.6% (YoY) compared with 6.8% in February 2023. to agriculture and allied activities rose 20.1% (YoY) against 15% a year ago.

The weighted average lending rate (WALR) on fresh loans stood at 9.36% in February 2024 from 9.43% in January 2024, but higher than 9.24% in February 2023. The WALR on outstanding rupee loans was at 9.83% in February, from 9.85% in January but higher than 9.61% in February 2023.

The share of External Benchmark-based Lending Rate (EBLR) linked loans in total outstanding floating rate loans was 56.2% at the end of December 2023, up from 53.3% at the end of September, while that of MCLR-linked loans was 39.4% from 41.9%in that order.