What is the reason ..?!
Corona infection in India has caused huge changes among banks and bank lending.
For example, banks generally focus more on corporate credit and commercial credit than retail credit services. Only in this category can you earn high income, as well as trade for a higher amount.
But some of the corporate loans have turned into bad debts due to the business impact after the corona infection. To overcome this situation, banks are increasingly focusing on retail loans.
The most important reason for this change in the banking and financial institutions is the change in the market.
Corona infection
The number of commercial borrowers has plummeted due to the corona infection, lockdown restrictions and declining incomes among the population. Companies are considering buying commercial loans as they will not be able to generate large returns if they expand their business during this period.
Loss of income
But at the same time more and more people are getting loans through bank and credit card for monthly expenses due to loss of income and loss of employment.
Companies and service sector credit
As a result, credit to Indian companies and the services sector has declined over the past 12 months, as has the retail loan segment of gold loans and credit card loans.
Retail or Personal Loan Division
Retail or personal loan segment trading in the Indian banking system accounts for just 26 per cent of total credit trading. The retail loan segment grew by 11.2 per cent in the 12 months ended July 2024. It has grown by 9 per cent in the previous 12 months.
Gold loan
Gold lending in this retail loan segment alone has increased by about 77.4 per cent in the last 12 months. As a result, it rose by Rs 27,223 crore to Rs 62,412 crore. Gold lending at SBI Bank, the country’s largest public sector bank, grew by 338.76 per cent. As a result, SBI Bank’s total gold loan trading value rose to Rs 21,293 crore.
Gold loan and corona
This increase in gold debt has highlighted the income and income impacts caused by corona among the population. Although the country’s economy has grown by 20.1 per cent, the status of the population has not yet risen.
Import of gold
As Shivaji says in the film, the rich are getting richer and the poor are getting poorer. An example of this is the increasing gold imports in India every month.
Sale of gold jewelry
On the one hand people are mortgaging gold jewelery without money and on the other hand the number of buyers of gold jewelery is increasing at a huge rate. Sales of gold jewelry are on the rise despite various new restrictions.
Credit card balance
Like gold loans, credit card outstanding money grew by 9.8 per cent to Rs 10,000 crore in the 12 months to July 2024. Credit card outstanding amounts increased by 9.8 percent in the 12 months to July 2020.
Industrial credit
Similarly, the industrial and service sectors grew by 1 per cent, compared to 2.7 per cent earlier.
Home loan division
And the home loan segment alone dominates the retail lending segment, accounting for about 51.2 percent of business.
Total debt stood at Rs 14.66 lakh crore, up 11.1 per cent from 8.9 per cent in the year-ago period, ending July 2024.
Auto Credit Division
The auto loan segment grew by 7.3 per cent in the 12 months ended July 2024 and 2.7 per cent in the previous 12 months. Similarly, agriculture and allied credit grew by 12.54 per cent and 5.4 per cent, respectively.
