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Credit offtake, one of the vital signs of activity in the economy, remained vigorous in June, thanks to the improved performance of non-banking financial companies (NBFCs), data from the Reserve Bank of India (RBI) showed.

In the last financial year, the gross bank credit-offtake went up by 15% to Rs 136.8 lakh crore, the growth being mainly driven by personal loans, services segments and NBFCs.

The same trend, even more charged and vigorous, continued in June too. Retail loans rose by 20.9% in June 2023 which was a further improvement on the 18.1% growth in June a year ago. In the retail category vehicle loans zoomed at 22.9% compared to home loans which rose at 15.1% (both rates year-on-year).

But credit cards, registering a growth of 36% outsmarted both home loans and vehicle loans. The total retail kitty shot up to Rs 42.6 lakh crore.

The credit to services sector rose by as high as 26.7% in June. It was more than double the 12.8% recorded in June a year earlier.

The credit offtake to NBFCs rose by an even more impressive 35.1%. The NBFC performance, too, was very robust compared to June 2022 when it grew by 18.1%. Credit to trade also went up to 17.3%. The comparable rate in June 2022 for trade was 16.7%. At the end of June this year, the total credit to services stood at Rs 38.85 lakh crore.

Though the financial activity in the first quarter is usually subdued, the rate of expansion of credit was very robust in the first quarter itself. Higher input costs led to an upward revision of working capital borrowings, experts indicated.

Overall bank credit rose by 16.2% in June 2023, compared to 14.5% in the same period a year ago.

Data indicated that the pace actually intensified till the middle of July, clocking a rate of growth of 20.2% to reach a cumulative figure of Rs 147.6 lakh crore till July 14. CARE Ratings indicated that the rise was triggered by HDFC’s merger with HDFC Bank.