Fiscal wrap | Banking sector saw an exceptional loan growth
Incremental loan growth on the non-food credit side for FY23 till now has been Rs 14.6 lakh crore. In FY23 monthly credit demand up to January 23 has been at Rs 1.46 lakh crore which is much higher than the previous best, which was recorded in FY20 of about Rs 1.4 lakh crore and it is one of the best in many years.
Loan growth for banking sector has been phenomenally strong in FY23. For the period ending January 27th 2023, overall credit growth was at 16.3 percent year-on-year and non-food credit growth was 16.7 percent year-on-year.
What has driven this loan growth and how it will pan out going head?
Incremental loan growth on the non-food credit side for FY23 till now has been Rs 14.6 lakh crore. In FY23 monthly credit demand up to January 23 has been at Rs 1.46 lakh crore which is much higher than the previous best, which was recorded in FY20 of about Rs 1.4 lakh crore and it is one of the best in many years.
Which sector has driven the long growth?
Personal loans, which include home loans have been one of the biggest drivers of loan growth in FY23 so far.
Services has been the next best segment to witness strong loan growth momentum, it formed around 31.50 percent of the incremental loans in the system up to January 2023.
Agriculture formed around 12.1 percent of the incremental loans, with industry forming around 9.50 percent of the incremental loans.
Talking about the best performing segment, in personal loans 35.55 percent has been driven by the housing sector, which includes priority sector lending as well. The second large part was from the other personal loans which contributed 30 percent of the incremental personal loans.
Vehicle loans and credit cards have done well too. Credit card performance in FY23 so far has been one of the best in the history for the banking sector with respect to outstanding lows, card issuances, as well as massive increase in ticket sizes.
Services sector performance has been strong too. NBFCs switch to banks from money market as liquidity dried up and money market rate shot up. So trade also formed a substantial portion of the incremental growth in services segment.
Shipping witnessed a decline in terms of incremental loan flows.
A look at the outlook.
Loan growth rate is expected to soften a bit going head, some part of the loan growth has been derived from lower principal repayment. Hence, when the repayment in principle starts to happen in the EMI it starts to increase, we may see some impact on the loan growth as well.
Capex demand is yet to come back, it may not come back in a high inflation scenario.
Corporate loans may continue to see working capital demand from the lenders due to better rates than money market instruments. Expect personal loans to continue driving the overall loan growth momentum.
NBFC demand will remain healthy due to favorable interest rate from banks than other instruments.
First Published: Mar 23, 2023 1:11 PM IST
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
Lok Sabha elections: 4th phase sees over 68% voter participation, West Bengal leads with 76% turnout
May 14, 2024 1:47 AM
Lok Sabha elections phase 4 witnesses around 63% voter turnout, experts weigh in on key contests
May 14, 2024 12:06 AM
Lok Sabha Election 2024: Shiv Sena UBT’s Arvind Sawant highlights Uddhav Thackeray's vision for Mumbai’s progress
May 13, 2024 9:21 PM
Exclusive interview: 'Southern states will be a big surprise,' says PM Modi
May 13, 2024 9:05 PM