PSBs share in incremental credit declined to 51% in September
The foreign bank's share grew from below 0.5 percent in September 2023 to 3.5 percent in September 2024.
PSBs share in incremental credit declined to 51% in September
New Delhi: The share of public sector banks (PSBs) in new credit decreased by three percentage points to 51% in September 2024 from 54% a year ago. This was due to PSBs slowing down the pace of lending to non-banking finance companies and unsecured credit.
According to the Monetary Policy Report released in September 2004, PSBs still accounted for the largest portion of new credit, even though their share decreased compared to private sector banks and foreign banks.
The share of private sector lenders' incremental credit declined marginally from 45.9 percent in September 2023 to 45.5 percent in September 2023. The foreign bank's share grew from below 0.5 percent in September 2023 to 3.5 percent in September 2024.
Read Also : RITES Ltd announces Changes in Senior ManagementPSB's credit growth on a year-on-year (Y-o-Y) basis stood at 12.9 percent in September lagging the 16.4 percent Y-o-Y of private lenders, according to the Monetary Policy report.
Anil Gupta, co-group head - Financial Sector Ratings, ICRA said the state-owned banks have been giving out substantial amounts to finance and housing finance companies. However, PSBs scaled down that lending after regulatory caution and an increase in risk weights for exposure NBFCs in November 2023.
The RBI data showed the outstanding bank credit to finance companies has been shrinking over the past four months. It declined from Rs 15.58 trillion in May 2024 to Rs 15.22 trillion in August 2024.
Read Also : Secretary, Petroleum Ministry laid foundation stone for Advance Training Institute ONGC, GoaPSBs were also active in the personal loans space after the pandemic. Though most of these loans are given to salaried employees working with government and public sector units, Banks are now going slow in this segment, PSB executives said.
The growth in the other personal loan category, which consists of unsecured credit, fell sharply to 13.2 percent year-on-year (Y-o-Y) in August 2024 from 23.7 per cent in August 2023. The pace of growth in credit card outstanding also fell to 19.9 percent from 31.4 per cent, RBI data showed.
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