Loans up across all sectors, total loans up 12.7% in May

In a sign that the economic recovery is gaining momentum, bank lending rose 12.6% in May, more than double the pace of growth of 4.9% in May last year.

Significantly, all sectors – agriculture, industry, services as well as retail trade have done better than last year, according to the latest data on the sectoral deployment of bank credit published by the Reserve Bank of India.

The latest Financial Stability Report (FSR) released by the Reserve Bank of India cites the reasons behind the resumption of bank lending. “Banks reduced gross non-performing asset ratio (GNPA) through collections, write-offs and reduced slippage,” the FSR said. are experiencing a modest return to profitability. These developments catalyzed double-digit bank credit growth, tracking nominal GDP growth.”

Industrial credit growth accelerated to 8.7% in May 2022, from 0.2% in May 2021, with loans to medium-sized industries increasing by 49.3% in May 2022, from 47.9% last year. Micro and small industry credit growth accelerated to 33.0% from 8.9%. Significantly, large corporate loans rose 1.9% from a contraction of 3.1% in the same period last year.

Credit to the services sector increased by 12.9% in May 2022 compared to 3.4% a year ago, mainly due to improved drawdowns by “NBFCs”, “professional services” and ” transport operators,” RBI said.

Personal loans maintained their upward trend and increased by 16.4% in May 2022 against 12.8% in May 2021, mainly driven by the “housing” and “car loans” segments.

Credit to agriculture and related activities increased by 11.8% in May 2022, compared to 9.4% a year ago.

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