In a recent report from the Reserve Bank of India, it was revealed that the credit extended to the industrial sector increased by 7.3% during the fortnight ending February 21, 2025. This is a slight decline from the 8.4% growth rate reported during the same period last year. The data underscores a mix of trends across various sectors, highlighting both growth and slowing momentum in credit distribution.

Key Sectoral Insights

The Reserve Bank’s analysis, which draws from data collected from 41 major banks representing nearly 95% of all non-food credit, reveals some intriguing trends:

• Petroleum and Coal Products: This sector, along with engineering, construction, and paper products, showed significant year-on-year growth, demonstrating the resilience of these industries.
• Agricultural Credit: Credit for agriculture and related activities grew by 11.4%, down from 20% in the previous year, indicating a slowdown but still reflecting a strong commitment to supporting this essential sector.

Year-on-Year Trends in Bank Credit

Overall, non-food bank credit grew by 12% year-on-year as of February 21, 2025, a notable decrease from the 16.6% growth rate reported in the same fortnight of 2024. This moderation suggests a cooling in the credit market, prompting stakeholders to reassess their strategies.

• Services Sector: The services industry experienced a 13% growth in credit, although this is down from 21.4% in the previous year. The report highlights a slowdown in credit allocation to non-banking financial companies (NBFCs), signaling potential challenges in this segment.
• Technology and Trade: On a brighter note, credit growth in the computer software sector accelerated, alongside robust performance in professional services and trade, which continue to show promise.

Personal Loans and Consumer Credit

When it comes to personal loans, the growth rate stood at 14%, a decline from the 18% noted a year ago. This slowdown is largely attributed to a decrease in growth rates in categories like other personal loans, credit card balances, and vehicle loans.

As the economic landscape evolves, these insights from the Reserve Bank of India serve as a crucial barometer for understanding credit dynamics across various sectors. Stakeholders will need to navigate these trends carefully to optimize their financial strategies in the coming months.