Banks' exposure to sensitive sectors up at 23.5 pct: RBI

Banks` exposure to sensitive sectors that comprise capital market, real estate and commodities edged up to 23.5 per cent of total loans and advances during 2018-19, a RBI report on India`s banking sector released on Tuesday said.

The RBI report, "Trend and Progress of Banking in India 2018-19", said lending to capital markets decline in 2018-19, as banks attempted to safeguard their balance sheets against volatile market movements.

"Capital market, real estate and commodities have been categorised as sensitive sectors by the Reserve Bank as the prices of these assets are prone to fluctuations that may pose a risk to financial stability," the report said.

By the end of March 2019, the capital market exposure of NBFCs had decreased compared to March 2018, even as real estate exposure edged down. As a result, an overall decrease in sensitive sector exposure was registered, the report said.

Priority sector credit, the RBI said, accelerated in 2018-19, largely driven by a recovery in credit to agriculture and housing.

"The steadfast drive to promote affordable housing under the ambit of the Pradhan Mantri Awas Yojana (PMAY), coupled with the RBI`s June 2018 initiative to expand the eligibility of housing loan limits for priority sector lending enabled a sharp jump in housing loan growth from 0.7 per cent in 2017-18 to 24.9 per cent in 2018-19. Both PVBs and PSBs contributed to this revival," the report said.