Private banks on a housing loan spree, 99% pay dues on time as of now | Data Premium

Personal loans dominate India's banking sector, with housing loans leading the way and low GNPA ratios.

For quite some time now, banks in India have been on a personal loan spree. So much so that the share of personal loans in the overall credit has crossed the share of loans given to the industries in the last two years. Personal loans consist of housing loans, vehicle loans, education loans, credit card payments, etc.

Table 1 | The table shows the share of various types of loans in the overall credit given by all banks in the September months of 2021, 2022 and 2023.

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By September 2021, the share of loans given to industries dominated with over 30% loan share. However, in the following years, the share of personal loans increased and reached 33% by 2023.

Table 2 | The table shows the year-on-year (y-o-y) growth in loans given to various sectors (in % terms).

Private banks are leading this personal loan spree. For instance, personal loans given by private banks grew y-o-y 17.8% in Sept. 2021, 18.8% in Sept. 2022 and by a remarkable 52.6% in Sept. 2023. Similar figures for loans given to industries by private banks were 8.6%, 14.2% and 10.7%. Corresponding figures for the service sector were 5.6%, 30.2% and 25%.

The high degree of spike in personal loans has caught the eye of the Reserve Bank of India. When the Monetary Policy Committee met in October last year, RBI governor Shaktikanta Das said, “...certain components of personal loans are, however, recording very high growth. These are being closely monitored by the Reserve Bank for any signs of incipient stress.”