Bank credit: Agricultural, MSME and retail lending contributes to growing the bank lending portfolio
Credit to agriculture and related activities remained robust at 10.4% in November 2021 compared to 7.0% in November 2020. Loans to individuals increased by 11.6% in November 2021 compared to 9.2% in November 2020, mainly due to “durable consumer goods” and “vehicle loans, the RBI said.
Credit to medium industries recorded robust growth of 48.7% in November 2021 compared to 25.7% last year. Credit to micro and small industries accelerated to 12.7% in November 2021 from 0.6% a year ago. But credit to large industries in November 2021 remained broadly at the same level as last year.
The surge in lending to MSMEs was 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 Scheme (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 services sector slowed to 3.6% in November 2021 from 8.2% a year ago. The Reserve Bank has collected the data on the sectoral deployment of bank credit from 33 selected commercial banks, representing about 90 percent of the total non-food credit deployed, RBI said.