The 4th quarter of the fiscal just ended saw a big increase in credit flow which helped banks to fulfill the credit growth estimate laid down by the RBI. The big portion of credit flow in this period was from the retail loan section but saw a big decline in credit to the home loan sector due to the provisioning norms last year.
The Marcoeconomic and Monetary Development Report of 2009-10 released by the RBI said that personal loans including education, home, consumer durable loans, etc formed around 6.5% to non food credit as of February from -0.2% in October of 2009.
Education loans showed a commendable increase of 30% while home loans went up by 8%.
RBI said, “Disaggregated data on sectoral deployment of gross bank credit show improvement in credit growth to all major sectors such as agriculture, industry, services and personal loans from November 2009 onwards”.
RBI also said that the incremental credit reported in the final quarter of FY’2009-10 was largest in 2 years in absolute terms.
But credit offtake in the home loan sector saw a big decline in the same period. RBI data shows that credit increase in this sector has dropped to 0.9% in the year ended February 26, 2010 as against 58% for the same period last year.
A big reason for the same was the provisioning requirement for advances in this sector which was increased to 1% from 0.4% in the 2nd quarter monetary policy review previous fiscal.