RBI Report: Increase in personal loans despite high interest rates stabilizing for two years

New Delhi| Housing, credit card and education loans under personal loans have increased by more than 23 per cent despite the stabilization of high interest rates for two years. According to RBI data, debt against housing rose the most by 36 per cent to Rs 27,18,715 crore by March, 2024. As of March, 2023, it was Rs 19,91,164 crore. Total personal loans have increased by 20 per cent to the level of 53.31 lakh crore.

Similarly, credit card arrears rose by 25.6 per cent to 2.57 lakh crore and education debt by 23.7 per cent to 1.19 lakh crore. Loans taken to buy consumer durable have increased by 13.4 per cent, loans against fixed deposits by 2.2 per cent, auto loans by 17.4 per cent and gold loans by 14.8 per cent. The share of personal loans in total debt increased to 27 per cent in 2023-24, up from 20 per cent in 2022-23. Agricultural debt rose from 15.4 percent to 20 percent in March, 2024. Industry debt rose to 8.5 per cent.

The business of banks basically runs by taking deposits from you and giving them loans to someone else. They take money from you at low interest and give it to others at high interest. The cost of funds of public sector banks was 4.1 per cent in 2022-23 and their earnings were 7.5 per cent. In 2023-24, the cost increased to 5 per cent, but the earnings from debt also increased to 8.41 per cent. Same is the condition of private banks also. Their cost was 5.4 per cent in March, 2024 but earnings from debt had been 10.4 per cent.

According to the report, the share of micro and small industries has increased from 13.1 to 14.7 per cent, that of medium units from 12.3 per cent to 13.3 per cent and that of loans to large companies from 3.5 per cent to 6.4 per cent. Similarly, the service sector accounted for 23.5 per cent of total debt, up from 19.5 per cent in 2023 March.

The share of big borrowers decreased
According to the report, the share of large borrowers from scheduled commercial banks in the total borrowings has decreased. In March, 2024, their share was 43.9 percent which was 46.5 percent in March, 2023.

Over 1.10 crore new credit cards issued in one year
More than 1.10 crore new credit cards have been issued in the country in one year. There were a total of 9.60 crore cards in November, 2023, which increased to 10.72 crore in November this year. Private banks account for 71 per cent and public sector banks for 23.82 per cent. The value of total transactions with credit cards reached Rs 1.70 lakh crore.

Dominance of public sector banks in debit cards
As of November, 2024, there were 99.36 crore debit cards. In this, the share of public sector banks is 64.67 percent and that of private banks is 24.94 percent.