Credit Growth to Industry Slows to 7.3% in February Fortnight, Services and Retail Lending Decelerate

Bank credit growth to India’s industrial sector slowed to 7.3% in the fortnight ended February 21, 2025, compared with 8.4% in the same period last year, according to Reserve Bank of India (RBI) data released on March 27. The overall non-food credit growth also decelerated, signalling broader moderation across sectors.

Credit to Industry and Agriculture

While industry credit grew at a slower pace, certain segments such as ‘petroleum, coal products and nuclear fuels’, ‘all engineering’, ‘construction’, and ‘paper & paper products’ recorded improved year-on-year growth. These sectors continued to see steady lending activity amid broader sectoral softness.

Credit to agriculture and allied activities registered a growth of 11.4% year-on-year in the fortnight ended February 21, 2025, down from 20% in the corresponding period last year.

Non-Food Credit Growth Slows to 12%

Non-food bank credit, which represents the bulk of overall lending, rose by 12% year-on-year in the fortnight ending February 21. This is lower than the 16.6% growth recorded during the same period in 2024.

The RBI’s sectoral credit deployment data is based on information collected from 41 select scheduled commercial banks, which account for around 95% of total non-food credit.

Services Sector Sees Slower Growth

Credit to the services sector grew 13% in the reporting fortnight, compared to 21.4% in the same period last year. The moderation was largely attributed to a slowdown in lending to non-banking financial companies (NBFCs).

However, credit to the ‘computer software’ segment accelerated, while lending to ‘professional services’ and ‘trade’ segments remained robust, highlighting sector-specific divergence in credit demand.

Retail Lending Growth Moderates

Credit to the personal loans segment grew at 14% year-on-year, compared to 18% a year earlier. The slowdown was led by weaker growth in ‘other personal loans’, ‘credit card outstanding’, and ‘vehicle loans’ categories, traditionally among the strongest retail loan performers.

Conclusion

The RBI data for February 2025 points to a broad-based moderation in credit growth across industry, services, and personal loan segments. While some sectors continue to register healthy lending trends, the overall pace of credit expansion reflects a cautious lending environment amid economic uncertainties and subdued demand.

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