Credit Growth in India Slows Down in June 2024: Anandrathi Report
In June 2024, credit growth in India dropped to 17.4% from 20.8% in May, according to a report by Anandrathi. Over the past year, credit offtake expanded by Rs. 20.4 lakh crore, while deposits grew by Rs. 23.9 lakh crore.
The report attributes the decline to reduced demand deposits and moderated time deposits. Interbank liquidity was in deficit but improved due to increased government spending. Investment growth continued to moderate, staying below average for six months.
Credit growth slowed across various sectors. The industrial sector, excluding infrastructure, grew at 9.7%, while infrastructure growth dropped from 7.2% in May to 5.5% in June. The services sector’s growth rate fell from 22.8% in May to 17.4% in June. Personal loans grew at 28.8% in May but dropped to 25% in June. Agriculture growth also declined from 21.5% in May to 17.4% in June.
Despite the overall decline, gold loans increased due to high gold prices. Net interest margins (NIMs) on outstanding loans slightly expanded, with the Weighted Average Lending Rate (WALR) rising to 2.98% from 2.94% in May. However, NIMs on new loans decreased as lending rates fell.
The report expects NIMs to remain under pressure, but the liquidity situation may improve due to ongoing government spending and higher capital flows.
Doubts Revealed
Credit Growth -: Credit growth means how much money banks are lending to people and businesses. When credit growth slows down, it means banks are giving out fewer loans.
Anandrathi -: Anandrathi is a company that provides financial services like investment advice and research reports. They help people understand how the economy and markets are doing.
Credit Offtake -: Credit offtake is the total amount of money that people and businesses borrow from banks. It shows how much people are using loans.
Demand Deposits -: Demand deposits are the money people keep in their bank accounts that they can withdraw anytime, like savings accounts.
Time Deposits -: Time deposits are the money people keep in the bank for a fixed period, like fixed deposits. They can’t take it out before the time is up without a penalty.
Net Interest Margins -: Net interest margins are the difference between the interest banks earn from loans and the interest they pay on deposits. It’s a measure of how much profit banks make from lending money.
Gold Loans -: Gold loans are loans that people take by giving their gold as security to the bank. If they can’t repay the loan, the bank can keep the gold.
