The demand for retail credit has also come back on track, mitigating the economic cost of the pandemic.
Non-Banking Financial Companies (NBFCs) like
, Edelweiss and IIFL, which were shrinking to save capital, have opened their wallets and are lending Rs 4,000 crore every month. Country’s largest mortgage lender HDFC Ltd sees significant growth in home loan requisition Similar to pre-covid levels.
“For the first time since the start of the pandemic, we are disbursing loans every month at the same pre-Covid levels,” said Umesh Revankar, Managing Director, Shriram Transport Finance. “Truck movement resumed normalcy and prompted many to expand business. We expect double-digit credit growth this financial year.”
Shriram Transport is disbursing over Rs 4,000 crore every month, which was like the times before the pandemic hit the business. There is demand for additional loans from equipment finance, tractors and light commercial vehicles.
Edelweiss ready to boom credit demand To buy construction equipment amid rising capital expenditure.
“In August and September, we achieved business volumes similar to pre-Covid levels for secured loans,” said Deepak Mittal, CEO, ECL Finance, the non-bank arm of Edelweiss Group. “Even MSME loans are adding to the credit demand. We have started funding their expansion.”
Road construction is expected to pick up from this month after the monsoon subsides. According to ICRA Ratings, backed by the government’s focus on growth in infrastructure spending, construction activity, is expected to see sustained improvement in the coming quarters and support volumes for the mining and construction equipment (MCE) industry.
In addition, individual borrowers and small traders are seeking to support home buying and expansion. The second wave of Covid infections could not disrupt businesses the way the first wave did last year.
“We are seeing more credit demand ahead of the festive season and with the increasing pace of vaccinations,” said Nirmal Jain, President, IIFL Group. “The second wave was short-lived unlike the first wave of the coronavirus, when we did not have a handbook on how to deal with its economic impact.”
IIFL Group is disbursing loans worth over Rs 2,000 crore per month that customers are taking to buy homes and support small businesses. They are pledging gold to raise loans to ease the immediate liquidity crisis. This has seen retail loan disbursements rising to pre-Covid levels.
Small retailers have taken to social media like Facebook or WhatsApp to deliver products to their doorsteps. They are expanding their product kit. Electronics goods are in high demand with a large segment of the population working from home.
Considering the high loan demand, home and gold loans have already been launched with home financier HDFC.
HDFC Ltd Managing Director Renu Sood Karnad said, “Home loan demand continues to be strong.” The disbursements have accelerated with the unlocking of the respective locations.
Currently, the monthly disbursements on home financiers have already increased above the pre-covid levels. During the quarter ended June 30, 2021, personal loan disbursements grew by 181 per cent over the corresponding quarter of the previous year.