Indian bank loan growth slows again in Nov. ’24

Indian banks’ loan growth slowed for the fifth consecutive month in November 2024, as lenders tightened their lending practices following the Reserve Bank of India’s (RBI) measures to curb excessive lending.

Banks’ credit grew by 11.8 per cent year-on-year last month, down from 16.5 per cent in November 2023, excluding the impact of HDFC Bank’s merger with its parent company, according to RBI data released on Tuesday.

With the merger impact, banks’ loans increased by 10.6 per cent last month, down from nearly 21 per cent a year ago.

Excluding the merger, loan growth slowed to 12.8 per cent in October and to 11.5 per cent including the merger. Loan growth also moderated in July, August, and September.

Indian banks have been consistently experiencing double-digit loan growth, supported by strong retail demand and urban consumption.

In October, the growth rate slowed to 12.8 per cent excluding the merger and 11.5 per cent including it. Loan growth also moderated in July, August, and September.

Indian banks have seen double-digit loan growth due to strong retail demand and urban consumption.

In late 2023, the RBI increased capital requirements for personal loans and credit cards to mitigate bad loan risks, leading to slower growth in these areas.

The RBI has cautioned the financial sector about excessive risk-taking, advised lenders to monitor stress from new lending practices, and raised concerns about the links between banks and non-banking finance companies (NBFCs).

Attribution: Reuters

Subediting: Y.Yasser