NBFC retail loan growth hits 22% as gold loans skyrocket
RBI data reveals a massive spike in NBFC retail lending, driven by a 69% surge in gold loans and strong growth in housing and consumer durable segments.
Non-banking financial companies (NBFCs) have witnessed a massive surge in retail lending, with growth accelerating to 22 per cent year-on-year in August. This sharp rise comes on the back of a significant appetite for gold loans and housing credit, according to the latest data released by the Reserve Bank of India (RBI) on Tuesday.
The acceleration in retail lending marks a substantial jump from the 13.6 per cent growth recorded during the same period last year, signaling a robust demand for credit among individual consumers.
Gold loans lead the charge with 69% growth
One of the most striking revelations in the RBI report is the explosive growth in loans against gold jewellery. This segment has emerged as one of the fastest-growing pillars of retail credit, expanding by a staggering 69.1 per cent year-on-year. By August, outstanding loans against gold jewellery reached approximately Rs 3.65 lakh crore.
The central bank noted that while gold-backed borrowing continues to expand at an exceptionally high pace, other retail segments are also showing significant momentum.
Housing and consumer durables see major upticks
Beyond gold, the demand for housing and consumer-oriented credit has seen a dramatic turnaround. The RBI's "Sectoral Deployment of Credit by NBFC" report highlighted several key trends:
- Housing Loans: Grew by 12.1 per cent, a massive leap from the mere 3.8 per cent growth seen in the previous year.
- Consumer Durable Loans: Witnessed an incredible expansion of 56.4 per cent.
- Vehicle Loans: Maintained steady and robust growth at 15.4 per cent.
Overall NBFC credit expands to Rs 60.64 lakh crore
The surge in retail lending has acted as a primary driver for the overall credit growth of the NBFC sector. Total credit extended by these institutions grew by 15.8 per cent year-on-year in August, up from 10 per cent a year ago. This brings the total outstanding credit to approximately Rs 60.64 lakh crore.
The data indicates that household-focused lending is currently outstripping the overall credit growth of the NBFC industry, highlighting a shift in where the money is flowing.
Agriculture and industry trends
The credit landscape showed varied performance across different sectors. Agriculture and allied activities recorded a robust growth of 17.4 per cent, a significant improvement from the 5.1 per cent growth recorded a year earlier.
However, the service sector saw a slowdown, with credit growth dropping to 16.2 per cent from 24 per cent in the previous year. While commercial real estate experienced buoyant expansion, the report noted a deceleration in credit growth for the trade and transport operator segments.
The RBI stated that this sectoral credit data is based on a sample of NBFCs in the Upper and Middle Layers, along with housing finance companies, which collectively account for about 87 per cent of the total credit covered by its reference data.