“Higher loan growth for private banks”


Private sector banks recorded higher loan growth than other banking groups (PSBs and foreign banks), their share in total credit steadily increasing to 35.4% in March 2021 from 20.8% in March 2015 , according to the Reserve Bank of India (RBI).

This came at the expense of public sector banks, whose share in total credit rose from 71.6 percent to 56.5 percent over the same period, the central bank said.

At the end of March 2021, foreign banks held a market share of 4% (4.9 at the end of March 2015); regional rural banks (3.1% against 2.6%); and small finance banks / SFBs (1 percent). SFBs became operational from 2016. At the end of March 2021, the gross outstanding credit of programmed commercial banks (BSCs) stood at 1 10 78,050 crore (68 78,400 ₹ crore at end of March 2015).

Personal loans shine

According to the “Basic Statistical Return on Credit by Scheduled Commercial Banks in India”, personal loans have continued to grow at a sustained rate over the past decade, and their share in outstanding bank loans has increased from 16.4 % to 25.9% in March 2021. 10 years ago.

These loans recorded double-digit growth throughout the years of the interregnum. The share of personal loans in total credit stood at 24% in March 2020.

The RBI said that as the number of small loan accounts with banks has grown over the years to meet personal lending and other requirements of small borrowers, the average size of bank loan accounts has gradually decreased to meet personal lending requirements. reach 3.7 lakh in March 2021 from ₹ 4.8 lakh in March 2015.

The decline in the average amount of loans at metropolitan bank branches was more pronounced, from 13.5 lakh to 7.7 lakh during the same period.

Industrial loans

Industrial loan growth, which has slowed over the past decade, first turned negative in 2020-21 as economic activity slowed in the wake of the Covid pandemic, the RBI said. Working capital loans in the form of cash loans, overdrafts and demand loans, which accounted for a third of total loans, taken out during the period 2020-2021, the central bank said.

Working capital loans represented 31.9% of SCB outstanding credit at end-March 2021.

Interest rates on bank loans fell further in 2020-2021; the share of loans bearing interest below 9% was 60.7% in March 2021 compared to 42.1% in March 2020 and only 16.4% in March 2019, the RBI said.

The use of credit in the southern region of the country has steadily increased and its share in total credit rose to 30.1% in March 2021, against 27.5% five years earlier; it overtook the Western region, where the share of credit rose from 32.4% to 28.8% during this period.


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