The last quarter was when the credit crunch struck India. How bad was it? Whom did banks lend to? The disaggregated credit data have now been provided by the Reserve Bank of India.
Personal loans outstanding increased by Rs16,384 crore between 29 August and 19 December, the two dates for which data have been provided. That is an increase of just 2.9% over the level on 29 August.
Contrast the rise of Rs24,044 crore between 23 May and 29 August, and it is clear that disbursement of personal loans has suffered a severe slowdown.
Among personal loans, the outstandings on account of housing loans went up a mere Rs2,879 crore, or 1%.
The rising non-performing assets in credit cards must have spooked the banks, because credit card outstandings rose just Rs303 crore over the period.
Education loans, however, were up Rs2,965 crore over the period, a rise of 12.5%.
Surprisingly, real estate loans continued to rise, going up by Rs8,267 crore, or 12%. Loans to non-banking financial companies rose by 11.7% over the period. In fact, loans to the services sector, including real estate, went up by 4.5% over the period.
Lending to industry was quite robust, showing a growth of 9.5%, or Rs86,251 crore. But a large chunk of that—Rs17,221 crore—was on account of the increase in advances to the petroleum sector.
Loan outstandings to the infrastructure sector went up by Rs27,846 crore over the period, or a rise of 13.3% ,over the 29 August level.
And despite the clamour by industry, there were substantial increases in advances to textiles, construction, iron and steel.
In sum, despite the perception of a credit crunch over the last quarter, data suggest that much of the slowdown in credit occurred not in the industrial sector but in personal loans.
Interestingly, loan outstanding to the priority sector fell marginally, indicating that lending to weaker sections has declined.
In short, industry has been clamouring about a credit crunch not because banks are not lending but because that lending has not been enough to fill the gap caused by the drying up of other sources of funding.
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