Bank Credit Growth Slows to 9.8% in May 2025; Industrial Lending Growth Drops to 4.9%: RBI Data
By Shishta Dutta | Published at: Jun 30, 2025 05:21 PM IST
Mumbai, June 30 – Bank credit to industry grew at a slower pace of 4.9% year-on-year during the fortnight ended May 30, 2025, compared to 8.9% in the same period a year ago, according to the Reserve Bank of India (RBI). The deceleration is part of a broader slowdown in overall non-food credit expansion, which rose 9.8% YoY, down from 16.2% in the previous year’s corresponding fortnight.
The figures are based on sectoral deployment data from 41 select Scheduled Commercial Banks (SCBs), covering approximately 95% of total non-food credit.
Key Credit Growth Trends (YoY, as on May 30, 2025)
| Sector | Growth in May 2025 | Growth in May 2024 |
|---|---|---|
| Non-Food Credit (Total) | 9.8% | 16.2% |
| Industry | 4.9% | 8.9% |
| Agriculture & Allied | 7.5% | 21.6% |
| Services | 9.4% | 20.7% |
| Personal Loans | 13.7% | 19.3% |
Industry-Wise Performance
While overall industrial credit slowed, certain segments continued to see resilient growth. The RBI noted that sectors such as ‘all engineering’, ‘construction’, and ‘rubber, plastic and their products’ witnessed accelerated credit growth.
Conversely, other core industrial sectors appear to be facing reduced credit momentum, possibly due to ongoing capacity utilization challenges or cautious capital expenditure planning by corporates.
Services Sector Dragged by NBFCs
Credit to the services sector saw a sharp moderation, increasing only 9.4% YoY, compared to a robust 20.7% expansion a year ago. The deceleration was primarily led by weaker credit offtake by Non-Banking Financial Companies (NBFCs) – a segment that has historically been a strong driver of services credit.
However, segments such as ‘computer software’ maintained robust credit momentum, signaling continued investment and demand in the IT and digital transformation verticals.
Personal Loan Growth Softens
The personal loans segment posted a 13.7% YoY rise in credit, easing from 19.3% last year. The moderation was largely driven by subdued growth in:
- ‘Other personal loans’
- Vehicle loans
- Credit card outstanding
The slowdown may reflect rising interest rates, cautious consumer spending, or base effect normalisation after the high post-pandemic credit surge.
Outlook
The May 2025 data indicates that while credit growth remains positive across key sectors, the pace of expansion has clearly moderated compared to last year. Sector-specific credit headwinds — particularly in agriculture and services — alongside elevated borrowing costs may be weighing on demand.
As the RBI continues to monitor inflation and liquidity conditions, future trends in credit deployment will be critical to gauge the momentum of India’s economic recovery in FY26.
About RBI Sectoral Deployment Data
The RBI’s sectoral credit data provides insights into lending patterns across agriculture, industry, services, and personal segments. The current data set covers 41 major SCBs, accounting for the lion’s share of India’s commercial banking credit.
Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.
If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com
Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations
