Non-food bank credit grows 6% in January

Gold loans rise 132% as credit to industry shrinks 1.3%

The pace of loan disbursal in India remained in the slow lane in January even as the economy reclaimed the growth trajectory it was on before the Covid-19 pandemic.

Non-food credit rose 5.7 per cent in January 2021 against 8.5 per cent in the corresponding month previous year.

The pace of retail credit, a segment which has the maximum focus of banks, decelerated to 9.1 per cent in January 2021 from 16.9 per cent in January 2020. However, loans against gold jewellery, most secure and liquid collateral, rose 132 per cent growth to ~43,141 crore, from ~18,596 crore a year ago.

Agriculture and allied activities — the backbone of rural India — showed an uptrend in credit growth, reflecting resilience and support from better harvest.

The Reserve Bank of India in a statement said credit growth to agriculture and allied activities accelerated to 9.9 per cent, from 6.5 per cent in January 2020.

Credit to industry shrank 1.3 per cent compared to a 2.5 per cent growth rate registered a year ago, mainly due to 2.5 per cent contraction in credit to large industries (2.8 per cent growth in January 2020).

Loans to medium industries registered a robust growth of 19.1 per cent against 2.8 per cent a year ago and credit to micro and small industries registered a growth of 0.9 per cent compared to 0.5 per cent a year ago.

Credit growth to the services sector decelerated moderately to 8.4 per cent in January this year, from 8.9 per cent a year ago. However, credit to ‘transport operators’ and ‘trade’ continued to perform well during the month, it added.