What portion of your salary should you spend on loan EMIs?
Most people buy a house or a car by taking a loan from the bank, but do you know what is the maximum portion of your salary that you should spend on EMI? What is the 40 percent EMI rule? What are the disadvantages of spending more on EMIs? Among home loan, personal loan, auto loan and credit card bills, which loan should you eliminate first?
Owing to festival demand boost, retail credit disbursements grew at a faster pace of 12.1% in September this year, compared to 8.4% in the same month last year, the Business Standard reported, quoting the RBI data. Retail credit includes home loans and auto loans, credit cards, and other services. The main drivers of growth were housing and vehicles, as well as loans secured by gold jewellery. In September 2021, credit to agriculture and related businesses grew at a pace of 9.9%, up from 6.2% in September 2020.
Credit to industry increased by 2.5%. Medium-sized businesses grew by 49% in September 2021, compared to 17.5% the previous year. Credit to micro and small businesses gained traction, with growth increasing to 9.7% in September 2021 from 0.1% a year earlier, the news report said.
Credit to large industries
Credit to large industries continued to shrink at 1% compared to 0.2% contraction in the year-ago period. The report quoted bankers as saying that lending to major businesses has been hampered by sluggish demand and balance sheet deleveraging.
The RBI stated that growth in credit to the services sector slowed to 0.8% in September 2021 from 9.2% in September 2020, owing to a decrease or slowdown in loans to non-banking financial enterprises, commerce, and commercial real estate.
For the first time in FY22, credit growth turned positive year-to-date in September, at 0.1%, suggesting a modest increase in demand.
According to data from the Reserve Bank of India (RBI), bank lending increased by Rs 7,283 crore until September 24, compared to a 1% decrease (or Rs 99,280 crore) in the same time last fiscal year (2020-21). As of September 24, outstanding bank credit totalled Rs 109.56 trillion.