Stricter norms related to unsecured lending have led to a decline in the demand of retail loans. As per the data, personal loans declined by 0.1 percent in the year up to October 2009 as compared to a 15 percent rise a year ago.

As per RBI, personal loans include loans for housing, credit card outstanding, consumer durables finance by banks, education loans and advances against fixed deposits. During the previous five years this segment has been the main growth driver for most entities.

To combat the credit crisis, banks formulated tighter norms for unsecured lending. The demand for home loans also decreased over last 18 months as buyers deferred purchases due to high real estate prices and uncertainty over income.

While RBI declined to reveal the latest numbers of credit cards and consumer durable loans, Deputy Governor Shyamala Gopinath said that the decreasing trend would continue.

When the apex bank had released the disaggregated data in the year up to August 2009, credit card outstandings were lower by 14.3 percent. Similarly consumer durable loans had declined 16.7 per cent. During the year up to August 2009, the personal loan segment had seen a 2.3 percent rise.

The data contained in RBI bulletin, at the end of October, pointed out that the credit card base had dropped 21 percent to 21.1 million, as against 26.7 million the previous year. The outstanding had declined by 12.13 per cent to Rs 5,660 crore at the end of October 2009, from 6,442 crore a year ago.

Till October this year, the overall bank loan growth dropped to 9.9 percent from 29.4 percent in the previous year, when demand had peaked as the credit crisis intensified.

The Deputy Governor said that credit flow (y-o-y) to agriculture increased 19.9, followed by industry (14.8 percent) and services sector (6.3 percent).

However, lending to real estate and non banking finance companies continued to record a high growth of 21.2 percent and 20.8 percent respectively.

There was a decline of 2 percent in the incremental flow towards personal loans.

Within industry, a bulk of incremental credit was absorbed by infrastructure (70.6 per cent), basic metal and metal products (16.9 per cent), textiles (4.1 per cent) and construction (2.9 per cent). The shares of infrastructure, basic metal and metal products, beverages and tobacco and paper and paper products in total incremental credit to industry increased in October 2009 from its level a year ago.