May 02, 2012, 10.04 AM | Source:

FY12 loan report: Banks love large cos, plastic is hot

The non-food credit, the amount of loans that banks give to individuals and companies, grew by 17% year-on-year to nearly Rs 42.90 lakh crore for the fortnight ended March 23, 2012. Surprisingly, credit card spending has showed sharp improvement recording nearly a growth of 13% y-o-y as against a de-growth of 10.2% a year ago.

Moneycontrol Bureau

Non-food credit - the amount of loans that banks give to individuals and companies - grew by 17% year-on-year to nearly Rs 42.90 lakh crore for the fortnight ended March 23, 2012, the Reserve Bank of India on Monday said in a statement.

The pace of credit expansion has surpassed the 16%-mark projected by the RBI for FY12. Due to the economic slowdown, the regulator had to revise the industry's credit growth projection from 18% to 16% in two-policy actions. The credit growth rate in FY12 is lower than the previous year's (FY-11) growth of 20.6%, at Rs 36.67 lakh crore.

Large corporate loans rose 24.3% to Rs 15.01 lakh crore as compared with 24. 1% growth last year. However, loans to micro-, small- and medium-companies grew slower. This underscores the fact that lenders mostly reposed their faith on large companies with better ratings and credibility, especially when the economy was not in a good shape.

During the year, credit to agriculture increased by 13.5% compared with 10.6% recorded in 2010-11.

Banks' credit exposure to non-banking finance companies (NBFCs) has declined substantially. The escalation in those loans has halved from 54.8% to 26.30% at about Rs 2.22 lakh crore. Banks have decided to provide lesser money to NBFCs due to persistent regulatory concerns.

Moreover, slower economic growth coupled with the higher rate of inflation has taken a toll on peoples' purchasing power. This is clearly evident according to RBI data which shows contraction in the growth of tourism, hotel and restaurants, commercial real estate, housing and vehicle loans.

Surprisingly, credit card spending has showed sharp improvement, recording nearly a growth of 13% y-o-y to Rs 20,500 crore as against a de-growth of more than 10% posted a year ago. Despite poor demand for credit, the rise in credit-card outstanding suggests higher usage of plastic money over cash.

Year-on-Year growth of some select sectors


% of growth in 2011-12

% of growth in 2010-11

Large Industry

24.3 (Rs 15.01 lakh cr)



12.1 (Rs 3.88 lakh cr)


Tourism & hotel

12.9 (Rs 31,320 cr)


Vehicle Loans

19.7 (Rs 94,900 cr)


Commercial Real Estate

7.8 (Rs 1.20 lakh cr)



26.3 (Rs 2.21 lakh cr)


Agriculture and Allied activities

13.5 (Rs 5.22 lakh cr)


Credit card outstanding

12.9 (Rs 20,440 cr)

(-) 10.2









N.B. Bracketed figures are absolute numbers.

In 2012-13, RBI has projected a loan growth of 17% y-o-y while deposit growth is estimated at 16%.


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