Bank loans show strong growth despite rising interest

Despite a sharp rise in interest rates, personal loans grew by 16.2 per cent in February 2011, substantially higher than the growth of 4.1 per cent during the corresponding period of the previous year, with most of its components such as housing, advances against fixed deposits, vehicle loans and education exhibiting accelerated growth, the Reserve Bank of India said on Thursday.

''On a financial year basis, growth in personal loans accelerated to 14.8 per cent from 2.8 per cent during the corresponding period of the previous year,'' the RBI said.

On a year-on-year basis, total non-food gross bank credit grew by 22.8 per cent in February 2011, compared with 15.9 per cent in the same month last year.

At the same time, banks have seen strong demand for loans from non-banking finance companies (NBFCs) and from the real estate sector during the year till February, the RBI data show.

''Credit growth to NBFCs at 46.4 per cent on a year-on-year basis in February was significantly higher than the growth of 19.8 per cent during the corresponding period of the previous year,'' RBI said.

During the first 11 months of the financial year, loans to NBFCs increased by 39.9 per cent as compared with 9.7 per cent during the corresponding period last year.