The share of personal loans in the books of banks has outgrown credit to large industry over the last 12 months, writes The Times of India. Home loans are now the single biggest sector in terms of advances, accounting for nearly 15% of bank credit as against infrastructure which has an 11.3% share.
According to data released by the Reserve Bank of India (RBI), bank credit as of end-February stood at Rs 89.8 lakh crore — an increase of only 7.3% over the previous year. Of this, the share of credit to the manufacturing sector is 31%, or Rs 27.9 lakh crore. This is almost unchanged from the end of February 2019 when, because of a much smaller base, industry accounted for a third (33%) of bank credit.
Personal loans on the other hand have grown 17% and stand at Rs 25.3 lakh crore (28% of the loan book) as of end February 2020. Growth in the personal loan segment has been driven by home loans, which also grew 17% year-on-year to Rs 13.3 lakh crore. This surge has increased the share of home loans in overall bank credit to 14.8%. Other personal loans, which include unsecured credit, grew at 20% to Rs 7 lakh crore, or nearly 8% of the banking sector’s portfolio.