Bank credit growth decelerates, Personal loans continue to grow faster than overall credit

Reserve Bank of India (RBI) stated in a latest update that Bank credit growth (y-o-y) decelerated to 9.9 per cent in June 2025 from 15.0 per cent (net of merger) in June 2024. The share of loans bearing interest rates below 9 per cent increased to 54.1 per cent in June 2025, from 43.2 per cent in the previous year, with easing of policy rates. In line with monetary policy actions, the weighted average lending rate (WALR) on outstanding credit declined by 39 basis points (bps) during April–June 2025, with reductions observed across all major sectors. Personal loans continued to grow faster than overall credit, gradually increasing their share to 32.0 per cent of total credit by June 2025; within personal loans, housing loans accounted for more than the half. Industrial credit growth (y-o-y) declined to 7.6 per cent in June 2025 from 11.3 per cent a year ago; its share in total credit declined marginally to 23.3 per cent in Q1: 2025-26 from 23.8 per cent a year ago. Credit growth (y-o-y) for public sector organisations maintained its upward trajectory in Q1:2025-26, rising to 11.3 per cent in June 2025, a significant turnaround from (-)1.7 per cent a year ago; their share in total credit stood at 13.7 per cent. The share of individuals in total credit rose to 47.2 per cent in June 2025, up from 46.5 per cent in June 2024. Growth in credit to female borrowers continued to outpace that of male, lifting women’s share within credit to individuals to 23.7 per cent from 23.4 per cent in June 2024. Metropolitan branches accounted for the majority of bank loans; however, their share in total credit moderated to 59.7 per cent in June 2025 from 60.6 per cent a year ago, as rural, semi-urban and urban branches recorded higher growth in bank lending. Public sector banks recorded higher credit growth (y-o-y) (11.0 per cent) than private sector banks (8.3 per cent) and foreign banks (8.0 per cent) in June 2025, sustaining their leading position of 53.7 per cent in total credit.