Some glimpses of changing credit landscape in India
Household now largest borrowers As per the latest data released by the Reserve Bank of India, the share of personal loans in total outstanding bank credit in India has grown to 27%. For the first time, the share of personal credit in the total bank credit is higher than the credit to the industry. In past 12 months, the share of personal credit has increased by 2%, from 25% in September 2020 to 27% in September 2021; whereas the share of industrial credit has declined by 1% from 27% to 26% over the same period. The share of credit to agriculture sector has remained mostly stagnant at around 12%. The trend could be explained, inter alia , through the following three key factors: (a) Rising institutionalization of the personal credit due to accelerating financial inclusion and digitalization of financial transactions. (b) Decline in share of NBFCs in the personal credit, due to a variety of reasons. (c) Deleveraging of balance she...