Personal loans have reported the highest growth among bank credit even as the Reserve Bank of India (RBI) has sounded an alert on unsecured credit to individuals.

Data released by the RBI for September showed personal loans reporting 30.4 per cent growth from a year ago, more than the non-food credit growth of 20 per cent, advances to industry at 7.1 per cent and services sector at 25.1 per cent that largely comprises loans to non-banking finance companies. The data includes the merger of HDFC into HDFC Bank.

According to a note from CareEdge Ratings, the personal loans segment is the largest segment with a 34.1 per cent share. The growth in September was boosted by the impact of the HDFC merger and growth in credit card outstandings.

Credit growth in the segment continues to be driven by miniaturisation of credit, increased use of credit bureaus for faster decisions and an increase in e-commerce transactions.

Within the personal loans segment, all major sub-segments witnessed strong demand during the month.

However, the rating agency noted that if one were to consider the growth in personal loans excluding the merger, it marginally moderated to 18.2 per cent over September 2022 compared with a growth of 19.4 per cent a year ago.

Housing loans grew the most by 37.3 per cent compared with 15.9 per cent a
year ago mainly due to the merger.

If the merger is excluded, the growth rate would have decelerated to 13.8 per cent because of a high base, a rise in the repo rate by 250 basis points and sales of high-value residencies.

On the other hand, vehicle loans saw a robust growth of 21.2 per cent compared with 19.8 per cent in the year-ago period, which is attributed to the premiumisation of the vehicle market and positive market sentiment.

Credit card outstanding continued to remain elevated in the month reaching Rs 2.17 lakh crore, a growth of 29.9 per cent over the previous year.