Chennai: Bank credit rose by a robust 15 per cent in December, supported by 20 per cent growth in retail loans and 35 per cent growth in loans to NBFCs.
On a year-on-year basis, gross credit rose 14.9 per cent in December 2022, while it grew 28 per cent compared to pre-Covid month of March 2020. An uptick in business activities post the Covid-19, inflation-induced higher working capital demand, capex done by the government, and preferences of NBFCs to shift for bank borrowings supported this growth.
Retail loans, which have 31.8 per cent share in the overall bank credit, grew by 20 per cent against December 2021 and 45 per cent against March 2020 due to miniaturisation of credit, strong growth in the vehicle, consumer durables and credit card outstanding, according to Care Ratings.
Housing loans, which has a 48.2 per cent share in retail loans, grew at 16 per cent and this is higher than 14.6 per cent growth recorded in December 2021. Real estate demand too was healthy in Q3FY23.
Vehicle loans registered a robust growth of 24.7 per cent as domestic automobile sales volumes grew by 8.5 per cent in December backed by discounts from OEMs to clear their year-end stocks. CareEdge Research expects the domestic automobile industry sales volume to grow between 17-19 per cent in FY23. The commercial vehicle segment is expected to show growth led by a healthy replacement demand.
Credit to NBFCs too grew by 35.5 per cent in December 2022 against a growth of 10.7 per cent in the year-ago period. The growth was driven by a shift of borrowings to the banking system, growth in the business of NBFCs, and the unwinding of TLTRO.
Among different sectors, aviation grew 100 per cent in December due to a low base and trade segment grew by 13.7 per cent. The growth in MSMEs at 14 per cent was lower than the 34 per cent growth of December 2021. Petroleum, coal products and nuclear fuels witnessed the highest growth of 52.9 per cent. Credit for chemical and chemical products rose 15.8 per cent. However, credit to shipping dropped by 2.2 per cent due to uncertain growth prospectus in the key global markets.
