(MENAFN- KNN India)
New Delhi, Jan 1 (KNN) India's bank lending growth continued its downward trend for the fifth consecutive month in November, reflecting the impact of the Reserve Bank of India's recent measures to curb aggressive lending practices.
According to RBI data released Tuesday, bank credit growth slowed to 11.8 percent year-on-year, excluding the effects of HDFC Bank's merger with housing Development Finance Corp, marking a significant decrease from the 16.5 percent growth recorded in November 2023.
The slowdown has been particularly pronounced in personal loans and credit card segments, following the RBI's implementation of higher capital requirements in late 2023.
Personal loan growth decreased to 12.2 percent from 22.4 percent a year ago, while credit card debt expansion fell sharply to 18.1 percent from 34.2 percent during the same period, excluding the HDFC Bank merger impact.
The central bank's cautionary stance against "all forms of exuberance" has led to increased scrutiny of lending practices, particularly regarding new lending models and the interconnectedness between banks and non-banking finance companies (NBFCs).
This regulatory oversight has contributed to a deceleration in credit growth to the services sector, which dropped to 14.4 percent in November from 22.2 percent a year ago, primarily due to reduced lending to NBFCs.
Despite the overall moderation in lending growth, industrial loans showed positive momentum, expanding by 8.1 percent year-on-year in November, surpassing the previous year's growth rate of 5.5 percent.
This increase in industrial lending suggests a shift in credit distribution patterns as banks adjust their lending strategies in response to regulatory guidance.
When including the impact of the HDFC Bank merger, the overall credit growth stood at 10.6 percent in November, down from nearly 21 percent in the corresponding period last year.
This continued moderation in lending growth, observed since July, represents a significant shift from the sustained double-digit growth rates that Indian banks had been reporting, which were previously driven by robust retail demand and urban consumption.
(KNN Bureau)
MENAFN01012025000155011030ID1109046873
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.