Key Highlights: 

  • Bank's credit growth continues at muted level
  • Retail loan has only 2.1% exposure in banks NPA issue
  • Retail loan stood at Rs 16.24 lakh crore by FY17

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Recent data compiled by the Reserve Bank of India (RBI) showed that gross lending by banks stood at over Rs 69.45 lakh crore in July 2017 – recording growth of just 4.7% year-on-year (YoY) basis.

Between April 2017 – August 2017, bank credit growth tumbled by over Rs 1.37 lakh crore, down 1.8% as against the similar period of the previous year.

Soumya Kanti Ghosh, Group Chief Economic Adviser at State Bank of India (SBI) said, "The deceleration in credit growth also highlights the role of supply side factors – stressed assets and capital constraint – in hindering a revival in the credit cycle.”

Banks credit cycle is divided in four major parts – agriculture, industry, services and retail loans.

Interestingly, retail loans have significantly low exposure in banks non-performing assets (NPA) issues and is thus currently the most preferred segment for most banks.

Can a home loan push help banks revive credit growth?

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