RBI Bulletin: Retail loans contributed to more credit growth than industrial, services sectors

Retail bank credit has emerged as a major contributor to the overall bank credit growth

Retail bank credit has emerged as a major contributor to the overall bank credit growth, especially after the onset of the COVID pandemic, the Reserve Bank of India's (RBI) monthly Bulletin said on June 23.

“Retail bank credit has emerged as a major contributor to the overall bank credit growth, especially after the onset of the COVID pandemic,” the RBI bulletin added.

The Bulletin, a monthly publication that offers insights into the developments in domestic and global economies, doesn’t represent the views of the central bank.

Empirical assessment of the retail credit cycle suggests that the ongoing retail-shift is cyclical and not permanent.

“Amongst the categories of retail credit, housing loans are found to be most sensitive to interest rates and asset quality of banks, followed by vehicle loans and unsecured loans,” said the bulletin.

Further, the bulletin also showed that share of retail loans by the scheduled commercial banks (SCBs) in aggregate credit had increased from 24.8 percent in March 2018 to 30.7 percent in March 2022 and further to 32.1 percent in March 2023.

The retail credit outstanding at the end of March 2023 was `40.85 lakh crore, more than double of that in March 2018, the bulletin showed.

"The share of retail loans by the scheduled commercial banks (SCBs) in aggregate credit had increased from 24.8 percent in March 2018 to 30.7 percent in March 2022 and further to 32.1 percent in March 2023 – the highest among the sectors," the bulletin said.