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  • 5 reasons why bank loan data matters

    The Reserve Bank of India’s website is a goldmine of data. Every day, every week, every month, it publishes data covering different aspects of the economy. These may look like just a jumble of numbers, but can provide deep insights into the shape of the economy.

    One of the data published every month is credit data—how much banks lend money to Indians from different sectors. Here are some interesting things to know from the October data:

  • Banks lend more

    Data is divided into two parts: money lend to the food sector and non-food-related sectors. Compared to last year, banks gave out 8.3% more money to non-food sectors compared to last October. This is good news—any lending activity suggests the economic engines are working. Even for food-related sectors like agriculture, credit grew by 11.1% in October 2015.

  • Slow growth

    However, there is a downside to this data: The growth in non-food credit has been slower than last year’s 11.1%. The slowdown in growth was sharper for the food-related sectors. In October 2014, credit jumped a good 20.3%. This marks a continuation of the slowdown in credit growth—a trend that has been in place for the past few years. This has worried experts, who feel the slow credit growth is a reflection of the slow economic growth. This is one reason why many find it hard to believe the 7.4% growth in the economy.

  • Industry, services growth

    The trend can be seen in both the services as well as manufacturing industries. Banks lent 6.8% more money to the services industry while credit to the manufacturing industry grew 4.6% in October 2015. This is lower than the 6.8% growth in Services credit and 7.8% rise in Industry credit last year. If you notice, the growth is lower in the Industry segment. This also shows that the services sector has been growing faster than the manufacturing industry.

  • Across board

    What’s worrying is that the slowdown in credit growth has not been limited to a single sector. It’s across board. “Deceleration in credit growth to industry was observed in all major sub-sectors barring chemical and chemical products and vehicles, vehicle parts and transport equipment,” the RBI report said.

  • The silver lining

    Indians borrowed more money in October 2015. “Personal loans increased by 16.9% in October 2015,” the RBI report said. The good news is that this growth is slightly higher than the 16.7% increase in October 2014. This could suggest the start of a pickup in consumer demand – one of the key necessities for economic growth.

    • You can get the RBI data here:  Read more

    • India's small towns adding to home loan growth by 19% Read more

  • 46

    There are hundreds of banks in India—commercial, co-operative, small or big, private or state-owned. Not all of them matter equally, though. This can be seen in the fact that 46 commercial banks lend 95% of the total non-food loans in India.