Personal Loans, Agriculture, and Industry Hit Hard — What RBI’s Data Reveals

India’s bank credit growth slowed to 10.2% in June 2025, falling from 13.8% in June 2024, according to the Reserve Bank of India (RBI). The decline was seen across all major sectors — agriculture, industry, services, and personal loans. Agriculture credit fell sharply to 6.8%, industry slowed to 5.5%, services dropped to 9.6%, and personal loan growth moderated to 14.7%. The slowdown reflects weaker credit demand amid cautious borrowing and sectoral challenges.

Overall Decline in Credit Growth

The Reserve Bank of India (RBI) has reported that the country’s bank credit growth dropped to 10.2% year-on-year in June 2025, compared to 13.8% in June 2024. This marks a significant decline, showing a cooling demand for credit across key economic sectors.

Such a decline indicates that businesses, households, and service providers are borrowing less, possibly due to high lending rates, global economic uncertainty, and tighter financial conditions.

Agriculture and Allied Activities: Steep Fall in Credit Demand

One of the most noticeable slowdowns was in the agriculture and allied activities sector, where credit growth plunged to 6.8% in June 2025 compared to a robust 17.4% in the previous year.

This sharp dip highlights a possible strain on farm investments, seasonal factors, and reduced spending power in rural India. It could also be a reflection of farmers becoming more cautious about taking loans amidst price fluctuations and monsoon uncertainties.

Industrial Credit: Mixed Trends with MSMEs Holding Strong

Credit to the industrial sector decelerated to 5.5% in June 2025, down from 7.7% in June 2024. Despite the slowdown, the micro, small, and medium enterprises (MSMEs) segment showed steady growth.

According to the RBI, certain industries like engineering, construction, and textiles saw accelerated credit growth, suggesting continued demand and resilience in these areas, even as the broader industry remained cautious.

Services Sector: Moderation Due to NBFCs

The services sector, a key driver of India’s economic activity, witnessed credit growth easing to 9.6% in June 2025 from 15.1% a year ago.

The slowdown was largely due to reduced lending to non-banking financial companies (NBFCs), which play a crucial role in extending credit to businesses and individuals.

However, segments such as computer software and professional services continued to show robust growth, signaling demand in knowledge-driven and technology-oriented fields.

Personal Loans: Cooling Demand in Key Categories

Growth in personal loans, which often drives overall retail credit, also slowed to 14.7% in June 2025, compared to 16.6% in June 2024.

The decline was mainly due to reduced demand for vehicle loans, credit card spending, and other personal loans. This reflects a cautious consumer sentiment, possibly influenced by inflationary pressures and high interest rates.

What This Means for India’s Economy

The overall dip in credit growth shows a cautious borrowing environment, raising concerns about slower consumption and investment demand. While some sectors like MSMEs, engineering, and IT-related services show resilience, the decline in agriculture and personal loans could weigh on economic momentum in the coming quarters.