The personal loan segment in the banking sector posted a record increase of nearly 32% year on-year in July 2023 - mainly due to the merger of HDFC with HDFC Bank.
The merger increased the bank's portfolio of house loans by more than £43 billion, driving up overall bank credit growth to 19.7%. According to RBI data, the merger increased bank credit by five percentage points. The annual gain would have been 14.7% without the merger. Bank credit stood at £1,480 billion as of July 28.
Banks' housing finance portfolio, which includes personal loans, increased by 37.4% at the end of July to reach £243 billion. Without the merger, it would have been £200 billion. The decrease in bank credit given to housing finance companies was another effect of the merger.
Additionally, there was a 12.3% year-on year increase in bank credit to the commercial real estate sector, reaching £40 billion, which would have been £33 billion without the merger.
Advances to the services sector, which are mostly consumed by non-bank finance companies (NBFCs), are the key drivers of loan growth given that credit growth to the industry sector is still in the low single digits.