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 Indian banks' loan growth moderated year-on-year this October, central bank data showed on Friday, as the growth of unsecured loans slowed following the Reserve Bank of India's efforts to clamp down on exuberant lending.

Banks' credit grew at 12.8% year-on-year last month, slower than the 15.4% increase in October 2023, excluding the impact of HDFC Bank's merger with its parent Housing Development Finance Corp (HDFC), the RBI said.

Including the impact of the merger, banks' loans grew 11.5% last month, compared with 20% a year ago.

Loan growth had moderated in August and September as well.

Indian banks have consistently reported double-digit loan growth for a while, helped by healthy economic growth and urban consumption. However, the RBI, worried about the risk of bad loans, imposed higher capital requirements on banks late last year.

Despite that, some segments, such as personal loans and credit card loans posted strong growth, in excess of 25%, until earlier this year when the central bank governor warned against "exuberance".

The RBI followed up on its norms with a series of actions against non-complying entities and that, along with rising defaults especially in the once fast-growing segments like personal loans and credit cards, has slowed both loan growth.

Banks' personal loan growth slowed to 11.5% in October from nearly 23% a year ago, excluding the merger impact, while growth in credit card outstanding dropped to nearly 17% from 28% a year ago, the RBI data showed.

Credit growth to the services sector decelerated to just over 14% in October from 20.4% a year ago, primarily due to lower growth in credit to non-banking financial companies.

On the flip side, loans to industry grew by 8% year-on-year last month, quicker than the 4.8% growth in October last year.