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The Reserve Bank of India (RBI), in its latest print for November 2024, reported an overall loan growth of 12.1% YoY, coming off from mid-to-high teen growth. Within segments, agriculture grew 15.1% YoY, services 13.8% YoY, retail 13.4% and industry sub6% YoY. Retail growth continues to remain soft at ~13% (>20% levels earlier). Within retail, with the festival season around, sequential growth picked up in most segments including unsecured retail except for vehicle loans, which saw a MoM decline. Led by seasonality, the unsecured segment witnessed a sequential traction. With this, retail share currently forms ~33% of loans, up from 19.0% in FY15, even as the industry’s retail share has plunged to ~22% from 44% in FY15. We observe three MoM trends: 1) the retail segment improved MoM, likely due to demand in the festival season, 2) low growth sustained in lending to non-banking finance companies (NBFCs), housing finance companies (HFCs) and public financial institutions (PFIs), and 3) the industry segment continues to see moderate growth. Overall loan growth seems to be softening, especially in NBFC’s and retail segments. While in-line with our expectations for FY25, we remain watchful of the credit-deposit ratio outcomes.

Retail loan growth improves sequentially; gold loans, an outlier: Retail growth came in at 13.4% YoY and 1.5% MoM in November. Unsecured retail growth in consumer durables slowed further to 4.7% YoY from 18-20% and personal loans at ~13.5% have been softening (post April 2024). Sequentially, there was healthy traction in unsecured retail, with consumer durables loans and personal loans up 4.5% MoM and 2.7%, respectively. With this, unsecured retail formed 31.1% of retail credit and ~10% of overall. Housing loans grew 12.1% YoY, constituting ~51.0% of retail loans. Vehicular loans grew at a moderated pace of 7.2% YoY, decelerating 1.8% MoM. One segment that grew sharply is gold loans, up >60% YoY, on a low base – we see this as a monitorable.

Overall growth moderates in services; growth in NBFCs softens: Services grew 13.8% YoY and 1.4% MoM versus 0.6% in October 2024, given the mixed trend in growth across segments. Interestingly, growth in the NBFC segment slowed further to 5.5%. Within NFBCs, the decline was sharper for PFIs than for HFCs. Among other segments, shipping, tourism, professional services and wholesale trade witnessed a sequential slowdown.

Industry growth moderates: Industry growth declined further to 5.9% YoY and ~1% MoM, led by growth across industries. Large industry and micro and small industries expanded 1% MoM each, whereas medium enterprises saw better traction at 1.4% MoM. We monitor industry developments and believe the corporate capex cycle will be key to bolstering overall growth. Within the industry, traction was better for Petrochemicals and Mining and within Infrastructure, Ports and Airports saw a pickup. We expect credit growth for the large industry segment to improve once the private capex cycle picks up, which, we believe, is still some time away

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