MUMBAI: The overall non-food credit growth of Indian banks has decelerated to 13.9% as of June 30, 2024, a significant drop from the 16.3% growth recorded in June 2023. This decline is primarily attributed to an unfavourable base effect, according to recent data released by the Reserve Bank of India (RBI). 

Despite the slowdown in overall credit growth, certain segments such as gold and housing loans have shown remarkable resilience and growth. The data indicates a sharp rise in gold loans, reflecting a growing trend among consumers to leverage their gold assets for financial needs. 

Similarly, housing loans have also seen a substantial increase, driven by a robust demand in the real estate sector and favourable interest rates. The total non-food credit stood at Rs 163.46 lakh crore as of June 30, 2024. This figure, while impressive, highlights the challenges faced by the banking sector in maintaining the high growth rates seen in the previous year. Analysts suggest that the base effect, which refers to the impact of a high growth rate in the previous period on the current period’s growth rate, has played a significant role in this slowdown. 

Gold loans, in particular, have surged due to the rising gold prices and the increasing popularity of gold as a secure collateral option. The RBI’s data shows that gold loans have grown by 30.5% year-on-year, reflecting the confidence of borrowers in using gold to meet their financial requirements. Housing loans have also contributed to the credit growth, with a notable increase in disbursements. The real estate sector has been buoyed by various government initiatives aimed at promoting affordable housing, coupled with lower interest rates offered by banks. 

The RBI data shows that overall growth in the personal loan segment was lower at 16.6 per cent (Rs 50.91 lakh crore) in June 2024 as compared to 21.3 per cent a year ago, largely due to moderation in growth recorded in ‘other personal loans’ and ‘advances against fixed deposits’.  However, credit growth to housing, the largest constituent of the segment, accelerated by 18.2 per cent at Rs 24.27 lakh crore in June 2024 from 14.8 per cent (Rs 20.52 lakh crore) a year ago, the report said.