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Agriculture and personal loans showed a higher growth while industry and services witnessed lower growth in the April-October 2014 period, according to credit rating agency Care Ratings.

Growth in credit so far this year has been sluggish with overall GDP and industrial growth conditions also being on the lower end, the agency said in its study on credit growth profile.

In the April-October period, agriculture credit saw a growth of 11.2 per cent (against 5 per cent in the year ago period) and personal loans were up 8.8 per cent (8.1 per cent).

Care Ratings attributed the lower credit growth to industry at 0.7 per cent (5.7 per cent) to both lower industrial growth of 1.9 per cent as well as high interest rates.

Bank credit to the services sector slowed to 1.5 per cent (8.3 per cent). Care said the growth in personal loans was driven by higher growth in vehicle loans in particular with mortgages also pushing up the rate, even though the growth was lower than that of last year.

“This is significant because notwithstanding unchanged rates of RBI, the household segment has gone in for such loans. Discounts offered by the auto sector and lower prices due to the excise relief provided in the Budget would have countered to an extent the high level of interest rates,” the agency said


Pointing out that the better performance in the consumer loans segment does not match flow of credit to the relevant sectors, Care Ratings said, “Vehicle loans growth has been high though credit to auto segment has been low (negative growth for motor vehicles).”

The growth in home loans, though lower than last year, is still high at 9.7 per cent (11.9 per cent) and is in sync with higher growth in loans to the construction sector.

Growth in credit to infrastructure has slowed down from 8.1 per cent to 5.7 per cent, which can be attributed to limited restarting of the stalled projects as well as the prevalence of high interest rates.

The rating agency said, in the April to November period, credit offtake had increased by 4.8 per cent compared with 7.3 per cent last year. In incremental terms, credit offtake from banks was ₹2,90,300 crore (₹3,86,000 crore).