Individuals borrow more, corporates deleverage – Times of India

MUMBAI: Even as the year-on-year growth in bank credit has crossed 14%, the highest in three years, the corporate loan book of banks continues to be stagnant.
According to data released by RBI, the bulk of the increase in bank lending has been on account of retail loans, with credit card outstanding, consumer durables and loans against fixed deposits being the new drivers of growth in FY22.
According to data on the sectoral deployment of bank credit as of end-July 2022, the share of the industry in overall bank credit has shrunk to 25.8%. It was 26.6% in end-March 2022 and 27% 12 months earlier in July 2021. At the end of March 2021, it was 28%.
Individuals continue to borrow for consumption even as corporates have deleveraged and repaid their loans. One indication of the increase in household borrowing is the increase in credit card outstanding from a little under Rs 1.3 lakh crore in end July 2021 to over Rs 1.6 lakh crore. The number is higher than March 2022 when the outstanding was a little lower than Rs 1.5 lakh crore.
The biggest household borrowing continues to be in the area of home loans that now stands at nearly Rs 17.7 lakh crore as of end-July 2022. The share of home loans in bank credit has gone up from 13% in end-July 2020 to 14% in end-July and has gone up marginally to 14.34% in July 2022. While growth in home loans has moderated, the share will see a spike following the merger of HDFC with HDFC Bank, which will see the home loan book of banks cross Rs 21 lakh crore.
In the personal loan segment, since end-March 2022, consumer loans and advances against fixed deposits have shown the fastest growth of 16.5% and 11.8%, respectively. During this period, home loans grew by only 5%.
In the industries segments, growth was subdued as loans to gems and jewellery, telecom, engineering, and edible oils shrank in absolute terms from the end-March 2022 levels. The sectors that recorded highest credit growth in absolute terms were metals, chemicals, power, roads and airports.
In terms of market share, infrastructure accounts for 38% of all industrial loans with nearly 20% being contributed by the power sector, followed by roads (8%) and telecom (4%).

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