Hit by the continued slow down in the Indian economy, banks have focused their attention on aam aadmi (common man) to grow their loan books.
Growth in personal loans at 9.2 per cent or Rs 9,84,400 crore outstripped loans to industry that grew at 8.5 per cent or Rs 23,72,300 crore during April-November 2013.
Even within the industrial credit, banks have seen a higher growth at 8.5 per cent in lending to micro and small scale companies — run by not so khaas aadmi. The credit to medium and large scale companies, still remained low at 4.4 per cent and 3.1 per cent.
“Banks’ preference to lend to the micro, small and medium size industries and agriculture and services than to the large industries can be linked to the overall state of industry.
The manufacturing sector has degrown by three per cent in the first seven months of 2013 compared to 1.1 per cent growth during the same period in the previous year,” said Madan Sabnavis, chief economist at Care Ratings.
Even external commercial borrowings did not find many takers among the large firms as is evident in the RBI approvals to ECBs being lower in April-October 2013 at $16.8 billion as against $18.6 billion in the same period last year, said Sabnavis.
In the individual credit space, housing and personal loan segments witnessed good growth. Credit card loans saw a negative growth, mirroring the reluctance of households to take loans for daily purchases.
Similarly, the growth of auto loans slowed down as people postponed their decision to buy or replace a car in the backdrop of a difficult hiring environment.
The slow offtake of auto loans could be in the slow car sales, which declined by 7.2 per cent for the first seven months of the year.
The sluggishness in industry and investment has been hangover from 2012 and borne out by India’s largest lender State Bank of India, in its Ecowrap, which says uncertain global and domestic environment dragged investment down by 8.7 per cent in 2012.
