The quantum of outstanding retail loans has come neck and neck with loans extended to the industry for the first time in Indian banking history, shows bank credit data released by the Reserve Bank of India. This, as banks and non-bank lenders have focused on retail lending for at least the last five years as weak investment and high leverage has kept demand for corporate loans low.
Bank credit data outstanding as of the end of February, released on March 31, shows outstanding retail loans stood at Rs 27.74 lakh crore, just shy of the Rs 27.86 lakh crore in loans to the industry. Retail loans have already surpassed Rs 26.6 lakh crore in credit outstanding to the services sector.
Retail loans have recorded close to 14% annualised growth over the past decade, while industry loans grew at a much lower 4% during the period. Loans to the services sector have grown at an annualised rate of 10%.
“Corporate lending has slowed down significantly over the years because of the pending bad loan and twin-balance sheet issues,” said Abizer Diwanji, leader-financial services at the advisory firm EY. “This was coupled with a slowdown in bank credit to the sector as economic activity stalled during the pandemic.”