Robust Non-Food Credit Growth in Indian Banking Sector: A Closer Look

Strategic Insights -

The Reserve Bank of India's (RBI) data for the fortnight ended July 15 reveals a significant 13.46% year-on-year (y-o-y) growth in non-food credit outstanding to Rs 122.45 trillion. This growth, sustained above 12% since June, is a testament to the Indian banking sector's resilience. The personal loans segment has been driving this growth, with the industrial sector also showing improvement in credit off-take. Ratings agency CareEdge notes that the medium-term prospects for these segments are robust.

Key Takeaways:

  • The non-food credit growth of banks has been on a high-growth trajectory for a couple of months, sustaining above 12% since June.
  • The non-food credit outstanding improved 13.46% y-o-y to Rs 122.45 trillion during the fortnight ended July 15, as per RBI data.
  • The personal loans segment has been leading the credit growth, with the industrial sector also showing improvement in credit off-take.
  • Private sector banks have outpaced public sector peers in terms of credit growth, posting above-average growth in loans.
  • Top banks such as ICICI Bank and HDFC Bank witnessed stellar growth of around 21% each in Q1FY23, with Kotak Mahindra Bank posting a loan growth of 29%.
  • The deposit growth in the banking system has grown by 8.35% to Rs 168.1 trillion during the period under review.

Statistics:

  • Non-food credit growth rate: 13.46% y-o-y (fortnight ended July 15)
  • Non-food credit outstanding: Rs 122.45 trillion (fortnight ended July 15)
  • Deposit growth rate: 8.35% (during the period under review)
  • Average growth rate of non-food credits since June: above 12%
  • Loan growth of ICICI Bank and HDFC Bank in Q1FY23: 21% each
  • Loan growth of Kotak Mahindra Bank in Q1FY23: 29%

Sources:

  • Reserve Bank of India (RBI) data for the fortnight ended July 15
  • CareEdge report on Indian banking sector
  • ICRA report on corporate bond market
  • Global Data Point report (2022)