Retail loans hit five-year low, drop to 7.3% in H1FY19: Report

Retail loans given by banks in H1FY19 (January-June 2019) touched a five-year low at 7.3 per cent, Reserve Bank data showed.

The subdued numbers come at a time when dismal employment and low consumption demand have dragged economic growth, reports the Economic Times.

As per details from RBI’s monthly sectoral deployment of credit data, the numbers are stark when compared to the same period in 2018 (7.7 per cent), 2017 (8.6 per cent), 2016 (8.1 per cent) and 2015 (8.5 per cent), the ET report sid.

The only other time that credit growth slowed was in the election year of 2014, which saw credit grow at 6.4 per cent year-on-year, it pointed out.

The sluggish growth was despite RBI efforts to mitigate economic stability through 75 bps rate cuts since December 2018, which were aimed at boosting consumption through the transfer of benefit to end-users.

In fact, the RBI’s Monetary Policy Committee is expected to announce another 25 bps repo rate cut on August 7.

A downturn in sectors such as auto, retail and personal loans may be reason for lower credit loan disbursements, bankers told the paper.

As per RBI data, total outstanding advances to the personal retail sector stood at Rs 22.5 lakh crore in June 2019, from which a significant 27.7 per cent chunk (Rs 6.2 lakh crore) is unsecured.

Further data from credit bureau CRIF High Mark showed that Portfolios at Risk (PAR) of delinquencies stood at 0.91 per cent in May. This is 8 bps higher than it was in March, it said.