Overview of India’s Bank Credit Growth in FY24

In the financial year 2023-24, India experienced a growth in bank credit of 15.3% year-on-year (y-o-y), excluding the impact of a merger between a non-bank and a bank that took place on July 1, 2023. When including the merger impact, the growth rate was 19.1%. This growth rate is higher than the 15.8% rise seen in the previous financial year.

Bank branches in rural, semi-urban, and urban areas all recorded similar or higher credit growth compared to the previous year, while metropolitan branches saw a slight moderation in growth. However, all population groups and bank groups maintained double-digit loan growth.

In March 2024, individuals in the household sector accounted for 47.4% of the total bank credit, and other households, such as proprietary concerns, Hindu undivided families (HUF), and partnership firms, accounted for an additional 10.4% share. The share of female borrowers in the banking system has been gradually increasing, with women accounting for 33.6% of loan accounts and 23.4% of the total amount of bank loans to individuals in March 2024.

During the financial year 2023-24, all major activities saw double-digit growth in bank credit. The share of personal loans in total bank credit continued to rise and reached 30.4% in March 2024, while the share of the industry declined to 23.2%.

Private sector banks have consistently experienced over 15% growth for three consecutive years, and their share in total credit by Scheduled Commercial Banks (SCBs) increased to 40.6% in March 2024 from 33.4% five years ago and 19.4% ten years ago. On the other hand, the share of public sector banks declined to 51.8% from 73.2% ten years ago.

The lending activities of small finance banks saw rapid growth, resulting in their share in total credit by SCBs increasing to 1.4% in March 2024 from 0.6% five years ago.

With the general rise in interest rates, the share of loans bearing an interest rate over 9% increased to 57.8% of total bank loans in March 2024, compared to a share of 56.1% a year ago and 31.4% two years ago.