Private banks stimulate credit growth | Bombay News
Credit continues to be driven by retail lending. In the wholesale market, part of the growth is due to the shift from money markets to lending, as the central bank has begun to withdraw excess liquidity. Also, the surge in commodities like oil has increased the demand for working capital.
The recovery in credit was led by private sector banks, which accounted for just over half of credit growth (50.4%), with public sector banks contributing 44.7%.
An SBI research report said: “Interestingly, retail loans have become the main driver of bank credit in recent years and now account for the largest share (30.5%) of outstanding credit. from all regular commercial banks, replacing industrial loans (28.9%) . Within retail, home loans have the largest share. According to SBI Group Chief Economist Soumya Kanti Ghosh, the importance of retail lending has increased for both private and public sector banks. Due to weak profitability and corporate deleveraging, banks have shifted their focus from large infrastructure and industrial lending to retail lending.
According to data on the sectoral deployment of bank credit, which is available until the end of February 2022, only 15% of the addition to the loan portfolio this year came from industry. Of the additional loans, 22% were for services, of which the largest share (10%) were loans to finance companies. Personal loans represent 46% of total credit.