NBFCs driving bank credit growth in India: report | spcilvly

In the last months of this year there has been a significant increase in bank credit. The trend also continued in August, where the gross purchase of bank credit increased by 19.8% year-on-year. Among all factors, non-banking financial services (NBFC) emerged as the largest contributor to bank credit performance, according to the latest report by CareEdge Ratings.

Personal loans and servicing segments emerged as the major contributors to bank credit growth. The services segment recorded strong year-on-year growth of 24.7% in August 2023. Non-banking financial services (NBFC), trading and commercial real estate played a key role in driving the performance of the sector in August of the year fiscal 24. NBFCs grew by 25.8 percent year-on-year in August 2023 compared to the same period last year. Apart from these factors, the HDFC Bank merger also had a significant impact on obtaining credit.

Impact of HDFC Merger on Bank Credit Growth

According to data from CareEdge, bank gross credit take-up increased by 19.8% year-on-year in August 2023. After excluding the impact of the merger between HDFC Bank and HDFC, the year-on-year growth stood at 14.9%.

The merger had a collective impact on all segments of obtaining credit. The services segment recorded a 24.7% year-on-year increase in August 2023. After removing the impact of the merger, it reported 20.7% year-on-year growth compared to 17.4% a year ago.

In the personal loan segment, the merger boosted its growth to 30.8% year-on-year in the month. Excluding the impact of the merger, the growth rate of personal loans decreased marginally by 110 basis points year-on-year, from 19.4% to 18.3% year-on-year.

NBFC Growth in August FY24

NBFCs grew a strong 25.48% YoY in August 2024 from 25.5% growth in August 2022. The strong growth was due to continued healthy loan disbursements reported by NBFCs for their dependence on the banking system , especially by smaller NBFCs. However, NBFC growth slowed from 35.1% year-on-year in June 2023 due to reclassification of HDFC loans. The growth in services is largely driven by NBFCs; If it were excluded, the growth was 12.4% year-on-year in the month.

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Updated: October 9, 2023, 10:12 pm IST

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