According to data from the Reserve Bank of India (RBI), the growth rate of non-food credit grew 13.8% year-on-year in the two weeks ended July 1, a double-digit growth rate for three fortnight in a row. Non-food credit grew by more than 10% every two weeks in the first quarter of the current fiscal year, with the exception of the two weeks ending May 20.
The outstanding non-food credit stood at Rs 120.99 trillion on July 1, up from Rs 108.45 trillion in the same two weeks a year ago. Deposit growth, which had moderated in the past two weeks ending June 17, also grew 9.77% year-on-year to Rs 169.6 trillion.
Among the recently reported loan growth data by some private banks for Q1FY23, HDFC Bank posted a 21.5% year-on-year growth in advances to Rs 13.95 trillion on June 30, 2022. Other banks like Federal Bank, IndusInd Bank , CSB Bank and AU Small Finance Bank (SFB) reported double-digit credit growth in the quarter.
Top private sector banks such as ICICI Bank, HDFC Bank and Axis Bank maintained strong mortgage payments, brokerage Emkay Global Financial Services said in a report. Armed with cost advantage and improved lead time, banks have gained market share in home loans as the State Bank of India (SBI), other public sector banks are also trying to bolster home loans, it said. While overall credit growth remains healthy, led by retail, analysts believe that better technology will help major private banks to leverage retail growth.
On the business side, companies are poised to borrow from banks after deleveraging in recent years, as recovery in economic activity and increased investment and consumption could support momentum, ICICI Securities had previously said.
While Q1FY23 showed robust growth in credit, analysts at Kotak Institutional Equities said growth has not been evenly distributed across segments as loan growth is led by the metropolitan area, which is rising from a lower base.