Declining incomes in the aftermath of Covid-19 forced many to rush to banks to pledge their shares and bonds to meet the shortfalls in cash.  

Advances against shares and bonds grew 24.4% over the previous year to Rs 5,017 crore, according to the sectoral bank credit growth figures released by Reserve Bank of India (RBI). 

In the year-ago period, the loans against shares decelerated by 18.7%. 

People also borrowed against their fixed deposits as job losses and declining incomes played truant with their repaying capacity. Loans against fixed deposits grew 17% over the previous year to Rs 7,009 crore.

In the year-ago period, there was a deceleration of 11.3% in loans against fixed deposits. The figures pertain to the annual growth rates at the end of January 31, 2022.

As gold prices fluctuated, banks brought down the lending against gold loans. The growth in gold loans halved to 32.9% over the previous year from a steep growth rate of 64.9%. They also increased the loan to value ratio of the gold loans to insulate from any losses that could emanate if prices fall.

Credit card usages also rose 9.3% to Rs 1,41,254 crore as people used the avenue of revolving credit. In the year-ago period, the credit card usages were growing by 6.9%.

Housing, which was once the mainstay of bank credit growth, lost steam albeit marginally to 7.6% at the end of January. This includes priority sector home loans. In the year-ago period, home loans  grew 7.6% as drop in real estate prices encouraged a small section of the population to invest in a home. 

At the height of the pandemic, vehicle loans of banks had grown sharply. But as normalcy returns, this segment of bank credit is losing steam and people are depending more on public transport.  Vehicle loans grew by a meagre 2.5% to Rs 2,81,518 crore from 5.9% a year ago.

Gross bank credit also improved to Rs 1,15,82,442 crore, maintaining an annual growth rate of 8.2% as banks stepped up credit to the smaller companies. 

The loans to medium-scale industries grew sharply by 74.7% over the previous year as banks stepped up credit to these segments. The micro and small enterprises also saw bank credit grow 19.7% at the end of January 31, 2022. In the year-ago period, the bank credit to this segment grew only by 0.5%. 

The Emergency Credit Line Guarantee Scheme (ECLGS) for MSMEs helped in pushing loans to the smaller enterprises as they were 100% guaranteed by the government. This scheme is now extended till  March 2023 along with an enhanced guarantee cover of Rs 50,000 crore, taking the total limit of the scheme to Rs 5 lakh crore from Rs 4.5 lakh crore earlier. Under this scheme, 100% guarantee is provided by the government while lending to the micro and small enterprises.

Within industry, credit growth to all engineering, chemicals & chemical products, infrastructure, leather & leather products, petroleum, coal products and nuclear fuels, rubber plastic & their products and gems & jewellery accelerated in January 2022 as compared to the corresponding month of the previous year. However, credit growth to basic metal & metal products, beverage and tobacco, cement & cement products, construction, food processing, glass & glassware, mining & quarrying, paper & paper products, textile, vehicles, vehicles parts & transport equipment and wood & wood products’ decelerated or contracted, RBI data shows.