Bank credit growth declines to 8.5 per cent in January: RBI data

MUMBAI: Indian banks are staring at the slowdown of a different kind. There has been a substantial decline in bank loans to most sectors, especially services, says the latest data released by the Reserve Bank of India.

According to RBI, growth in bank credit dropped to 8.5% in January compared with 13.5% in the same month a year ago. 

While credit flow to various sectors has tapered, growth in advances to the services sector plunged to 8.9% in January from an impressive 23.9% in the same month in 2019.

Likewise, bank credit growth to non-banking financial companies slowed to 32.2% from 48.3% a year ago. Growth in loan disbursal to agriculture and allied activities, too, fell to 6.5% from 7.6%.

So did credit growth to industry, from 2.5% to 5.2%. 

“Credit growth to textile, food processing, chemical & chemical products, basic metal & metal products, all engineering and infra decelerated,” RBI said, pointing to a slowdown in these sectors.

Credit to housing segment grew 17.5% in January against 18.4% last year; education loans showed a negative growth of 3.1% against a negative growth of 2.3% in January 2019. 

RBI Governor Shaktikanta Das had recently described poor credit growth as the banking sector’s biggest challenge.