RBI report: Despite high interest rates there is rise in personal loans being stable for two years

Despite high interest rates being stable for two years, housing, credit card, and education loans coming under personal loans have increased by more than 23%. According to RBI data, loans against housing increased by 36% to Rs 27,18,715 crore by March 2024. By March 2023, it was Rs 19,91,164 crore. Total personal loans have increased by 20% to Rs 53.31 lakh crore.

Similarly, credit card dues have increased by 25.6% to Rs 2.57 lakh crore and education loans have increased by 23.7% to Rs 1.19 lakh crore. Loans taken to buy consumer durables have increased by 13.4%, loans against fixed deposits by 2.2%, auto loans by 17.4%, and gold loans by 14.8%. The share of personal loans in total loans has increased to 27% in 2023-24, which was 20% in 2022-23. Agricultural loans have increased from 15.4% to 20% in March 2024. Industrial loans have increased to 8.5%.

The business of banks basically runs by taking deposits from you and lending the same to someone else. They take money from you at a lower interest rate and give it to others at a higher interest rate. Public sector banks' funds cost was 4.1% in 2022-23 and their earnings were 7.5%. In 2023-24, the cost increased to 5%, but the earnings from loans also increased to 8.41%. The same is the case with private banks. Their cost was 5.4% in March 2024, but their loans' earnings were 10.4%.

According to the report, the share of micro and small industries has increased from 13.1 to 14.7%, medium units from 12.3% to 13.3% and the share of loans given to large companies has increased from 3.5% to 6.4%. Similarly, the share of the service sector in total loans was 23.5%, which was 19.5% in March 2023.