Bank credit: agricultural loans, MSMEs and personal loans help increase the bank loan portfolio


Bank lending rose 7.1% in November, above the 5.9% recorded in the same period a year ago, mainly thanks to better growth in loans to individuals, agriculture and MSMEs , according to the latest data on the sectoral deployment of bank lending published by the Reserve Bank of India

Credit to agriculture and related activities remained strong at 10.4% in November 2021, up from 7.0% in November 2020. Loans to individuals increased by 11.6% in November 2021 from 9.2% in November 2020, mainly due to “consumer durables” and “vehicle loans,” the RBI said.

Credit to medium-sized industries saw robust growth of 48.7% in November 2021, up from 25.7% last year. Credit to micro and small industries accelerated to 12.7% in November 2021, down from 0.6% a year ago. But credit to large industries in November 2021 remained broadly at the same level as last year.

The sharp increase in loans to MSMEs is largely due to government efforts to revive the economy, which has slowed due to the pandemic-induced lockdown. Under the Emergency Line of Credit Guarantee Program (ECLGS), MSMEs get up to 20% of the borrower’s total outstanding credit and up to Rs 25 crore is fully guaranteed by the government. This is part of the Rs 20 lakh crore package to help industries affected by the COVID-induced lockdown.

Credit growth to the service sector slowed to 3.6% in November 2021 from 8.2% a year ago. The Reserve Bank collected data on sectoral bank lending deployment from 33 selected commercial banks, representing about 90 percent of total non-food loans deployed, RBI said.


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