PSBs' share in loan market declined nearly 20% in 10 yrs, private banks' pie doubled: RBI

The credit shares of scheduled commercial banks have come down as compared to the private banks operating in the same bracket, a report by the Reserve Bank of India (RBI) stated. As per the latest data released by the central bank on Wednesday, it was found that in March 2022, public sector banks’ share in total credit by scheduled commercial banks stood at 54.8 per cent in March 2022 as compared with 65.8 per cent five years ago and 74.2 per cent 10 years ago.  

It noted that in the same period, the share of private sector banks nearly doubled to 36.9 per cent over the last ten years. The report highlighted that all the bank groups recorded robust credit growth during 2021-22 after the pandemic period as the businesses started getting back to normalcy. 

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However, the credit shares of rural, semi-urban, and urban branches of scheduled commercial banks have gone up at the cost of metropolitan branches of banks over the last decade. As per the latest data, bank branches in urban, semi-urban, and rural areas maintained a double-digit annual growth of 60 per cent in credit in March 2022, whereas credit growth for metropolitan branches increased only to 9.2 per cent.

In terms of states, Maharashtra (26.2 per cent), Delhi-NCR (11.3 per cent), Tamil Nadu (9.2 per cent) and Karnataka (6.8 per cent) together accounted for over half of the credit extended by the banks. 

More personal loans 

The report also noted that in the last one decade, the share of industrial loans in total credit has been gradually declining, whereas the share of personal loans has been increasing. Both these sectors had nearly 27 per cent credit share in March 2022. 

Last week in another report, RBI said that growth in personal loans stood at 20.8 per cent in June 2022, which actually drove the overall system credit growth.  

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The report added that this growth came despite a 0.31 per cent increase in the weighted average lending rate in this segment.   

In contrast, credit to industry grew at 7.2 per cent in the June 2022 quarter, up from 4.8 per cent in the quarter-ago period. Share of individuals in total credit increased to 44.1 per cent in June 2022 quarter from 43.7 per cent in the previous quarter, the report said. Credit growth for female borrowers outpaced the growth in loans availed by male customers, RBI noted.