Credit Offtake Of Industry And Services Slowdown Since Start of Fiscal

Chennai: Amidst uncertainties, the credit offtake by industry and services has been decelerating since the beginning of the financial year. The sluggishness has been more pronounced among large industries.

The gross credit offtake has continued to moderate, reaching 9.5 per cent in June 2025 after expanding in the range of 10 – 16 per cent over the past couple of years. This deceleration can primarily be attributed to a slowdown in the large industries, NBFCs, commercial real estate, housing, vehicle, and other personal loan segments. In June 2025, non-food bank credit grew by 9.3 per cent compared to 13.9 per cent in the same period a year ago, as per the data of CareEdge.

In June 2025, growth in the credit outstanding to industry fell to 5.5 per cent compared to 7.7 per cent in the year-ago period, driven by a pronounced slowdown in the capex spending. In fact, the growth has come down from high-single digits last year to low single-digits since the beginning of the fiscal year.

Among major sectors, outstanding credit to mining and quarrying, food processing, beverages and tobacco, petroleum, coal products, nuclear fuels, chemicals and chemical products, glass and glassware, cement and cement products, basic metal and metal products decelerated.

Within industry, large companies saw the credit growth of 6.9 per cent June 2024 dipping to 0.8 per cent by June 2025.

The infrastructure sector, accounting for 33.5 per cent of overall industry credit, saw a y-o-y contraction of 0.5 per cent in June 2025, a reversal from 5.5 per cent growth a year earlier. Within this, credit to the roads segment declined by 5.7 per cent, following an 8.8 per cent growth seen in the previous year, with similar weakness observed in the ports, railways, telecommunications and other infrastructure sectors. The contraction reflects a combination of high base effects and shifting to alternative funding.

Growth in the services sector moderated to 9 per cent in June 2025, nearly half of the 15.1 per cent reported a year ago, primarily due to a decline in lending to NBFCs, commercial real estate and other services, and was only mitigated in part by growth in the computer software and shipping, aviation.

In commercial real estate, growth moderated to 14.9% in June 2025, down significantly from 22.8 per cent in the same period last year, reflecting a continued slowdown in the segment.

In agriculture, the deceleration from 17.4 per cent to 6.8 per cent was partly driven by the reclassification of agri-gold loans under personal loan.

This broad-based slowdown can be attributed to a combination of factors, including a high base effect, subdued demand, and a cautious approach by banks towards managing the Credit-to-Deposit (CD) ratio.