Bank Credit Deployment: Retail Races Ahead, Says CARE Ratings

The non-food credit growth accelerated to 6.8% Year-on-Year (y-o-y) in September 2021 as against a rise of 5.1% growth in September 2020, expanding with a 162 basis points (bps) y-o-y and 07 bps Month-on-Month (m-o-m) due to the easing of the lockdown restrictions and beginning of the festival season, CARE Ratings has said.

"The growth was driven by the retail, the agriculture & allied and industry segments, with services reporting sluggish growth. Credit of the agriculture & allied segment rose by 9.9% in September 2021 due to increased demand in rural regions based on higher production estimated for the Kharif crop," CARE Ratings has said in a report
Retail/Personal loans

"The credit of the retail/personal loans segment (currently the largest segment) grew at 12.1% y-o-y in September 2021 (similar to the growth rate witnessed in August 2021) mainly on account of growth in housing, vehicles, loans against gold jewellery and other personal loan (sub-segments) due to the festive seasons and the gradual opening of the Indian economy. SBI's retail loanportfolio grew by 15.2% in Q2FY22, surpassing the retail loan growth of Indian banking industry," the ratings agency has said.
According to it, as per media commentary, property registrations in Mumbai recorded a rise of 35% y-o-y September 2021, while residential sales during January - September 2021 increased by 47% across the seven major cities in India.

"The housing loans (share of 50.7%within retail) grewat 9.0% in September 2021 as compared with a growth of 8.2% a year ago. The housing loan segment was also driven by growth in the affordable housing and low-level interest rates. The other personal loans (share of 29% within retail) grew at 18.2% in September 2021 as compared with a growth of 11.4% a year ago. Apart from the private sectors banks, the key public sector units SBI and BoB have been also focusing for unsecured loan growth through their digital platforms," Care Ratings has said.

"The housing loan segment was also driven by growth in the affordable housing and low level interest rates. Consumer durables (share of 0.4% within retail) registered a significant growth of 40% in September 2021 as compared with a growth of 14.9% a year ago, credit card outstanding (share of around 4.0% within retail) grew at 9.5% in the reported period. The loan against gold jewellery (share of around 2.2% within retail) registered the highest growth of 59.1% as compared with a growth of 42.3% in September 2020. SBI gold loan portfolio registered a strong growth of 338.7% in Q1FY22 driven by essential medical needs and job losses due to the Covid-19 second wave, however, growth moderated to 91% in Q2FY22. However, advances to individuals against shares, bond, etc, and the education registered a drop of 25.4% and 2.9%, respectively, in the reported period. Within the retail/personal loans segment, most of the sub-segments reported growth, while couple of reported de-growth during the period," it has noted.

As far as the priority sector is concerned, Care Ratings has noted that the total lending of the priority sector rose by 5.6% to 39.6 Lakh crore in September 2021, driven by growth in the agriculture and allied activities, the micro & small industries and the weaker sections due to ELCGS scheme and higher production estimated for Kharif production.