Sharp increase in loans to NBFCs, renewable energy and aviation in January

Mumbai: Non-food bank lending growth slowed to 5.7% in January, led by a decline in industrial and business personal loans. Credit growth in this category was 8.5% in January and 5.9% in December.

Lending to aviation and non-bank financial firms rose sharply in January, despite service sector lending growth slowing further, reaching 8.4% yoy in January 2021, after rising to 9.5% in October 2020 and October 2020 8.8% was up. In December.

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In the service sector, the aerospace sector saw credit growth jump 120% 12,280 crore at the end of January 2021, down from a 60% decrease last year. Similarly, loans to NBFCs such as Power Finance Corporation and Rural Electrification Corporation saw 151% growth 71,109 crore over the same period.

Loans to NBFCs grew to 20.2% year-over-year after falling to a 38-quarter low of 7.8% year-over-year in November 2020. MoM growth was a whopping 12.1% after several months of flat growth.

In the personal loan segment, year-over-year growth slowed to 9.1%, the lowest in 10 years after growth recovered to 10% year-over-year in November. Within this segment, home loans grew sluggishly at 7.7% year-over-year, the lowest in 10 years, and credit card debt grew 5%. Auto loan growth slowed slightly, reaching 7.1% year-on-year. Gold loans continued their growth momentum, reaching 132% year over year.

Agricultural credit growth accelerated further to 9.9% year over year, fueled by successive monsoon surpluses.

Industrial loans continued to decline 1.3% in January. This trend has been led by large industrial loans, which make up 82% of industrial loans.

However, this segment saw a monthly growth of 50 basis points. Micro and small industry saw negligible year-over-year growth of 90 basis points, while growth in loans to medium-sized industry continued to grow, reaching 19.1% year-on-year. The growth in lending to medium-sized industries was supported by disbursements under the Emergency Loan Guarantee System (ECLGS).

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