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RBI Data: Retail Trade and NBFCs Drive Credit Growth in Services

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Retail trade and NBFCs driveAccording to the “Sectoral Deployment of Bank Credit — January 2023” data from the Reserve Bank of India (RBI), significant offtake from retail and Non-Banking Financial Companies (NBFCs) led to a rise in credit to services of 21.5% year over year (YoY) in January 2023 compared to 5.7% in January 2022.

  • Loans to retail climbed by 21.8% in January 2023, up from 6.9% in January 2022.
  • Loans to NBFCs climbed by 31% in January 2023, compared to 9.9% in January 2022.
  • NBFCs lend sectors such as retail, micro, small, and medium enterprises (MSMEs), agriculture in addition to microloans.

The data is collected from 40 designated scheduled commercial banks (SCBs), which make up roughly 93% of all non-food credit deployed by SCBs.

Note – NBFCs include Housing Finance Companies (HFCs), Public Financial Institutions (PFIs), Microfinance Institutions (MFIs), and NBFCs engaged in gold loan and others.

Highlights of The Sectoral Deployment of Bank Credit

i.Non-food bank credit increased 16.7% in January 2023 compared to 8.3% in January 2022 on an annual basis.

ii.In January 2023, credit to personal loans grew by 20.4% YoY, up from 12.8% in January 2022, largely driven by ‘housing’ and ‘vehicle loans’.

  • Housing loans climbed 15.4% YoY in January 2023 compared to 12.8% in January 2022.
  • The home loan portfolio of Banks increased from Rs. 16.36 trillion in January 2022 to Rs. 18.88 trillion in January 2023.

iii.Around Rs. 1 trillion had been lent by Banks for vehicle purchases over the past 12 months, which led to a 25.5% YoY increase in loans in January 2023 as opposed to a 9.6% YoY increase in January 2022.

iv.Credit to industry grew at an 8.7% annual rate in January 2023, compared to 5.9% in January 2022.

  • Credit to large industries climbed by 6.5% in January 2023, compared to 0.2% in January 2022.
  • Growth in medium-industry credit has slowed from 52.4% in January 2022 to 18.1% in January 2023.
  • The rate of credit growth for micro- and small- industries dropped from 23.3% in January 2022 to 15.2% in January 2023.

v.The rate of credit growth for agricultural and allied sectors increased from 10.4% in January 2022 to 14.4% in January 2023.

vi.Credit to the services sector rose by 21.5% YoY in January 2023 compared with 5.7% in January 2022.

vii.Over the course of a year, loan growth increased in industries like basic metal and metal products, beverage and tobacco, cement and cement products, chemicals and chemical products, food processing, glass and glassware, mining and quarrying, petroleum, coal products, and nuclear fuels, vehicles, vehicle parts, transport equipment, and wood and wood products.

viii.Contrarily, credit growth slowed for sectors like engineering, construction, gem and jewellery, infrastructure, leather and leather-related products, paper and paper-related products, rubber and plastics, and their byproducts, and textiles.

Recent Related News:

i.According to the most recent Reserve Bank of India (RBI) data on “Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals,” Indians remitted about USD 1.99 billion in November 2022 under the LRS.

ii.Outward remittances under LRS increased 29% to USD 1.99 billion from USD 1.54 billion in November 2021.

About the Reserve Bank of India (RBI):

Governor – Shaktikanta Das
Deputy Governors – Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
Headquarters – Mumbai, Maharashtra
Establishment – 1st April 1935