Understanding the Changing Trends in Bank Lending in FY24 📈
If you are interested in the world of cryptocurrencies, you may also be curious about the recent shifts in bank lending patterns that took place in FY24. Let’s explore the key changes and trends that emerged during this period:
Recovery of Lending to Large Companies 🏢
- Lending to large companies, which had contracted during the Covid era, rebounded in the last fiscal year.
- The Reserve Bank of India intervened to enhance the quality of retail lending by instructing lenders to allocate higher risk weights to unsecured lending.
- This decision, although it slowed down the growth in unsecured loans, contributed to the overall improvement of banks’ loan portfolios.
Growth Disparities in Different Sectors 📊
- Excluding the impact of the HDFC and HDFC Bank merger, loans to the services sector exhibited a faster growth rate of 20.2%, surpassing the 17.7% growth in retail loans by the end of March 31, 2024, as per the most recent RBI data on the sectoral deployment of bank credit.
- Incorporating the impact of the HDFC merger, retail loans continued to lead with a growth rate of 27.6%, trailed by the services sector at 22.9%.
Regulatory Measures and Their Impacts 🛡️
- In November 2023, the RBI elevated the risk weights on unsecured consumer loans and credit cards by 25 percentage points to 125-150%.
- Consequently, the growth rate of unsecured loans decelerated to 20.8% in FY24 in contrast with the 26.7% growth registered in the preceding year.
Diverse Credit Growth Trends 🌐
- Excluding the influence of the HDFC merger, the growth in non-food bank credit in FY24 stood at 16.3%, compared to 15.4% in the prior year based on RBI data.
- The credit extended to various industries saw discrepancies, with an 8.5% growth observed in FY24 compared to 5.6% in the previous fiscal year.
- Notable accelerations were observed in credit to industries such as chemicals & chemical products, food processing, and infrastructure, while credit to basic metal & metal products moderated.
- Credit growth in agriculture and allied activities remained robust at 20.1% by March 31, 2023, compared to 15.4% in the previous period.
Summarizing the Key Changes in Bank Lending Trends in FY24 🔄
If you are following the developments in the banking sector, the alterations in lending patterns during FY24 are essential to grasp. With a recovery in lending to large companies, disparities in sectoral growth rates, regulatory interventions impacting unsecured lending, and diverse trends in credit growth, the landscape of bank lending has undergone significant transformations recently. Stay informed about these shifts to understand the evolving dynamics of the financial market.
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