India’s BFSI sector witnessed steady credit growth, with outstanding loans increasing by approximately 13% year-over-year (yoy) in September 2024. Deposit growth also picked up, likely to receive a further boost from the current rising interest rate regime.
On a month-on-month basis, outstanding loans across scheduled banks declined by 1.1%, but recorded a 13% yoy uptick, reaching Rs 172.9 trillion. This growth was driven by remarkable credit expansion in the banking sector, with both public and private sector banks contributing equally. Credit growth reached 15.4%, largely fueled by the personal loan segment, revealed latest data by 1Lattice.
Also Read: Monthly Credit Records : 16% uptick in overall outstanding loans in Mar’24
However, outstanding loans in scheduled banks grew at a faster pace than deposits. Deposits across scheduled banks recorded a 12% yoy growth in September, despite a slight 0.4% month-on-month decline, totaling Rs 219.2 trillion.
Historically, banking credit has shown significant growth, increasing from Rs 60 trillion to Rs 138 trillion between FY14 and FY23, representing a growth of over 2.3 times. Similarly, bank deposits surged 2.4 times from Rs 77 trillion to Rs 187 trillion during the same period, a report by State Bank of India revealed.
Prior to this, aggregate deposit growth had experienced a slight moderation during 2021-22.
Growth in non-cash retail transactions
The 1Lattice data further revealed that the non-cash retail transactions witnessed a significant spike by approximately 17 per cent yoy in September 2024 while it witnessed a slight downfall of 0.6 per cent on a month-on-month basis. Total non-cash retail transactions recorded was Rs 73 trillion in September.
Also Read: Monthly Credit Records : 13% uptick in overall outstanding loans in August 2024
The non cash retail transactions by value were mainly dominated by the NEFT mode of payment, followed by Unified Payments Interface (UPI).
NEFT recorded Rs 36 trillion worth of transactions, followed by UPI with Rs 20.6 trillion transactions, CTS with Rs 5.4 trillion transactions and credit and debit cards with Rs 1.8 and Rs 0.4 trillion transactions respectively in September 2024, the data added.
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