Bank Lending Growth Decelerates; Some Sectors Still Shine

Bank credit growth has moderated across industries, the Reserve Bank of India (RBI) data shows. As of April 18, 2025, banking system's total lending increased by 11.2 per cent year-on-year. This is a considerable decline from the 15.3 per cent growth in the same period last year.

The slowdown was especially evident in the retail segment. Expansion in personal loans, which had been growing at breakneck speed in the recent past, moderated to 14.5 per cent from 17.0 per cent last year. A sharp slowdown in unsecured loans was the reason here, with their growth decreasing by half—from 18 per cent to 9 per cent. In the same way, the speed of vehicle finance and credit card payments also decreased significantly, from approximately 17 to 23 per cent in the previous year to 9 to 11 per cent this year.

However, some areas stood out with strong growth. Loans against jewellery and those given to the renewable energy sector under priority sector lending surged by more than 100 per cent. Lending against gold and other jewellery grew by 120 per cent, while credit to renewable energy jumped by 110 per cent. These figures reflect changing consumer and business preferences, with a growing focus on clean energy and asset-backed borrowing.

On the industrial side, credit growth slightly improved. Industrial lending increased to 6.7 per cent as against 6.9 per cent in the previous year. In contrast, credit grew at a stronger pace in certain sub-sectors which included metals and alloys, engineering goods, vehicles and transport equipment, textiles, and construction. However, slowdown was noticed on the other hand on the growth of credits to infrastructure, which appeared to be restricted or appeared to be weakening large-sized projects.

The credit growth in the services segment, too, saw a sharp moderation to 11.2 per cent from 19.5 per cent in the same period last year. This was primarily on account of a decline in lending to the non-banking finance companies (NBFCs), which borrow large amounts of money from banks in order to lend again. Credit to trade and computer software segments, however, continued to be strong.

Agriculture and allied activities, the other significant segment, grew by 9.2 per cent—down considerably from 19.8 per cent in the corresponding period last year. The fall may be on account of seasonal trends or lower rural credit demand.