As per RBI data, the non-food credit grew 18.3% YoY to Rs 128.6 lakh crore as on October 2022. Loans to MSMEs and retail via NBFCs, home loans and large corporate accounted for a big chunk of the credit growth. Personal loans rose 20.2% YoY, loans to industry grew nearly 14% and loans to the services sector increased nearly 23%. Bank loans to NBFCs rose 38% YoY as NBFCs continued to find banks’ interest rates more favourable than the rates offered by the capital market.
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We believe the incremental bank credit growth for FY23E will be mainly driven by the retail segment. In addition, corporates (especially MSMEs) are turning to banks for working capital limits. Hence, we expect bank credit growth for FY23E to be in early double digits, which remains a positive phenomenon for the industry.
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