There has been a structural shift in bank credit from the industrial sector to the retail sector, according to CARE Ratings. The share of industrial sector in total outstanding credit declined from 40-45 per cent between FY10 and FY16 to nearly 30 per cent at present.

This shift, according to CARE, can be attributed to the change in focus of banks to lend to the retail sector, where the probability of delinquency is lower, compared to the industrial sector, which has relatively higher levels of non-performing assets (NPAs).

Nevertheless, the growth in bank credit has witnessed an improvement, with bank credit having grown by 9 per cent between April 1, 2018, and February 15, 2019, compared with 4.9 per cent in the comparable period a year ago, the credit rating agency said.

In fact, credit growth has even surpassed the growth in bank deposits (6.1 per cent), one of the major factors that constrained liquidity in the banking system in recent months, it added.

During the current fiscal (April 2019 to January 2019), credit growth has mainly been driven by the retail sector (growth of 12 per cent), followed by services (9 per cent), and agriculture (5 per cent).

Although credit growth to industry has improved compared to the corresponding period previous year, it is still low at less than 2 per cent, said the study.

Although the share of industry in total outstanding credit is the highest at around 33 per cent, its share has declined in recent years. The share of Services is nearly 27 per cent, retail 25 per cent, and agriculture 13 per cent in total outstanding bank credit, according to the rating agency’s study on bank credit profile between April 2018 and January 2019.

Industries

Large industries account for more than 80 per cent share in the total disbursement of credit to industries. This is followed by micro and small industries (13 per cent) and medium industries at 4 per cent.

Non-banking financial companies (NBFCs) took the largest chunk of the total credit disbursed to the services sector at around 25 per cent, followed by trade (22 per cent) and real estate (9 per cent).

Credit disbursed to housing is the highest at around 52 per cent, followed by other personal loans that include loans to employees, personal occasions such as marriages and gold (27 per cent), and vehicle loans (9 per cent).

Of the total outstanding credit (₹82.8 lakh crore) as of January 2019, 32 per cent is disbursed to the priority sector.