Services Sector Credit Grew by 29% in January 2024: Report

Service sector growth: services sector witnessed a surge in credit growth by 28.9 per cent year-on-year in January 2024, a significant uptick from 21.4 per cent in corresponding period last year. This growth was primarily driven by major segments such as NBFCs and tre, furr boosted by a favourable base effect.

In contrast, banks' exposure to NBFCs experienced a deceleration, reaching Rs 15.0 lakh crore in January 2024, reflecting a 15.6 per cent year-on-year growth, nearly halving from growth rate reported in January 2023. Despite this, proportion of NBFC exposure relative to aggregate credit decreased marginally from 9.7 per cent to 9.4 per cent during same period. six-month average year-on-year expansion in bank vances to NBFCs also reduced to around 21 per cent, down from previous average growth of approximately 28-30 per cent, attributed partly to increased risk weights and higher borrowings in capital market.

industry growth, albeit moderating to 8.3 per cent year-on-year in January 2024 from 8.6 per cent in December 2023, and 8.7 per cent in January 2023, was partially offset by impact of HDFC-HDFC Bank merger. Excluding merger effect, growth would have been slower at 7.8 per cent. 

Within infrastructure sector, credit growth varied across sub-segments. While telecommunications, railways (excluding Indian Rail), and or infrastructure segments reported faster growth compared to previous year, power and ros segments witnessed comparatively slower growth rates. Similarly, power-focused Infrastructure Finance Companies (IFCs), supported by government schemes and improved financial positions, have been steily expanding ir loan books, grually increasing ir share in exposure to power sector.