With interest rates remaining high and real estate prices yet to show any decline, the growth in demand for housing loans is on the decline. The growth in housing loans, which was 25.8% (Rs 46,019 crore) during the period ended February 16, 2007, has declined to 12% (Rs 26,930 crore) during the period ended February 15, 2008, the Reserve Bank of India (RBI) has said. The outstanding housing loans as on February 15, 2008, is Rs 251,688 crore.
 According to the RBI report on Monetary and Macroeconomic Developments, credit growth is slackening. The expansion in bank credit to the commercial sector moderated during fiscal 2007-08 and remained within the Reserve Bank’s policy projection in April 2007, after a strong pace of credit expansion for three consecutive years. Non-food credit by scheduled commercial banks (SCBs) expanded by 22.3% (Rs 4,19,425 crore) year-on-year as on March 28, 2008, compared with 28.5% (Rs 4,18,282 crore) a year ago.
The personal loan segment showed slower growth during the year. While personal loans witnessed a rise of 30.6% to Rs 104,225 crore during the period ended February 16, 2007, the rise declined to Rs 58,669 crore, a growth of 13.2%. The growth in loans to the real estate sector declined to 26.7% (Rs 11,361 crore) against 79% (Rs 18,770 crore) in the previous year. It said,“The deceleration in credit growth relative to the acceleration in deposit growth has led to a decline in the incremental credit-deposit ratio, year-on-year, of SCBs to 71.9% as at end-March 2008 from 84.3% a year ago”.
On the other hand, the corporate sector continued to rely on a variety of non-bank sources of funds such as capital markets, external commercial borrowings (ECBs) and internal generation of funds. Resources raised through domestic equity issuances during 2007-08 (Rs 48,153 crore) were 68% higher than those a year ago. Net mobilization through external commercial borrowings (ECBs) during April-December 2007-08 increased by 54% over the corresponding period of the previous year.
Mobilization through issuances of commercial paper (CPs) during 2007-08 was nearly three times the issuances during the previous year. Internal generation of funds continued to provide strong support to the funding requirements of the corporate sector, despite the profits after tax (PAT) of select non-financial non-government companies witnessing some deceleration in April-December 2007-08 compared with the corresponding period of the previous year.