Personal loan figures are lowest amongst various loan segments

The Reserve bank of India (RBI) has released a data according to this industry and agriculture sectors have absorbed a larger amount of the total gross bank credit while in the personal loan segment it is limited also home loans and credit cards has shown decline.

The figure of loans given to the real estate sector is high as it includes all the loans given to the development of hospitals, educational institutes, hotels and commercial finance. The real estate industry has absorbed 47.4% of the total bank credit against 43.2 per cent a year ago.

On the other hand personal loans, such as housing, credit card outstanding, education, consumer durables, and advances against fixed deposits amounted to 7.6 per cent of the incremental non-food credit therefore shows limited lending in this segment. By the end of May, the total amount of personal loans has declined to Rs 29,266 crore as against Rs 72,777 crore a year ago.

According to M Narendra, executive director, Bank of India, “Credit absorption by infrastructure companies have been encouraging, we expect other segments to fall in line with the busy season in the second half. With the economic conditions improving and interest rates going down substantially, housing should see a revival this year. In fact, home loans have started improving, but credit cards are down as banks are cutting back on their losses”.

Steep rise in real estate prices in metros is also responsible for the dull demand home loan segment. By the end of May home loans stood at Rs 13,028 crore, whereas total home loans at the end of May 2008 amounted to Rs 31,735 crore. There was decline in the credit card outstanding by May-end which had come down to Rs 381 crore as against Rs 7,116 crore in the corresponding period a year ago.

However the education loans showed a substantial growth with the total outstanding of up to Rs 7,338 crore by the end of May 2008 from Rs 5,914 crore a year ago, the reason being most of the banks especially the public sector banks had aggressively increased their portfolios.

A decline was seen in the negative growth in consumer durable loans of up to Rs 300 crore at May-end as against Rs 534 crore at the end of May last year.

RK Bakshi, executive director, retail, Bank of Baroda explained, “The growth in credit deployment was lower in 2008-09 because of the economic slowdown in the normally busy season of second half of the year”. In fact the growth in loans to the commercial real estate, continued to be high. In May 22 the loans to the real estate sector had risen to Rs 32,321 crore from Rs 17,018 crore at the end of May 2008.