Retail bank credit has exploded, but the money loaned has not reached consumers. Finally, despite the strong growth in retail bank credit, stores are struggling to have fewer customers to buy. The reason for this confusion is a complex classification of bank credit. Loan receivables by non-banks are now sold to investors, also known as retail securitization transactions, a CRISIL report says. So that money doesn’t reach consumers and stays out of the market. However, these loans are still considered “retail loans” which keeps increasing in number.

Data shows that retail bank lending grew 16.6 percent, twice as fast as overall bank lending. However, in support of the above assertion, another dataset also shows that retail securitization volume doubled in the previous year and climbed 39% in the first half of the year. In progress. Even the total securitization loans reached 31% of additional bank credit in the previous year, compared to 17% in 2017 and 11% in 2015.

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Therefore, loan growth after deducting securitization flows shows a decline from 16% in FY19 to around 12% so far. It is also the slowest growth in the past five years, which matches India’s economic growth. In the first quarter, India recorded a GDP growth rate of just 5 percent, which was the lowest in the past six years. Despite the announcement of several fiscal measures in the second quarter, GDP growth fell further to 4.5 percent.

The current slowdown in retail credit growth points to both macroeconomic challenges that have limited demand for loans and a decrease in loan sanctions by banks, the CRISIL report says. Auto sales fell, while sales of durable consumer goods, housing and many other consumer-oriented sectors were sluggish.