“The festive season for retail lending is expected to be very strong, which will support margin/core-profitability along with asset re-pricing,” said Anand Dama, banking analyst.
, “Most banks have raised their growth guidance for FY13, factoring in a strong June quarter and improving growth impulses across retail, SME and corporate portfolios. Within retail, mortgage growth remains healthy, while pick-up Signs of is visible in an otherwise weak vehicle. Finance too. Unsecured loan Growth remains strong, led by cards and PL (personal loans), given underlying strong demand and banks turning pro-risk, leading to improved asset quality,” Dama said.
According to the latest data released by the Reserve
In the fortnight ended July 29, credit growth continued its strong growth with a year-on-year growth of 15.1%, the fastest since April 2019.
The bulk of the growth has been driven by retail loans – home loans and personal – while corporate demand is also showing signs of revival.
Deputy Managing Director Rajiv Anand said, “India has reasonable GDP growth, we are quite comfortable as we look into the future, the system is growing over 14%, so we expect to grow more than that.”
, “In this context, retail growth, MSME growth remains strong and corporate demand is back.”
Noting the strong growth seen in credit, central bank governor Shaktikanta Das pointed to banks raising deposit rates and said they have to repeatedly rely on “central bank money to fund credit growth”. should not be trusted.
At the banking system level, deposit growth of just over 8% has undermined credit expansion.
“The most likely effect is that the rate hike will be passed on by banks to deposit rates,” Das said. “Already the trend has started. Quite a few banks have hiked their deposit rates and this trend will continue. When there is credit offtake, obviously banks can maintain that credit offtake and only then support when they have more deposits. They cannot depend on central bank money on perennial basis to support credit offtake. They have to mobilize their own resources and their own funds,” he had said.