Traders expect sales during Diwali to reach levels seen before the pandemic early last year. This is partly because financiers, sitting on a huge pile of spare cash, are eager to lend with outstanding consumer durable loans that are already at their highest level in more than three years. Borrowers want to take advantage of record low interest rates, a better labor market as the lockdown eases and a better economic outlook as vaccination picks up pace.
HDFC Bank’s retail loans grew 12.9% in the three months ended September from a year ago, marking the lender’s first double-digit growth in such loans since the pandemic struck. The country’s third-largest private lender, Axis Bank’s retail lending grew 16%, the fastest pace in five quarters, and India’s top consumer lender Bajaj Finance saw a record growth in assets.
“We expect economic activity to improve further with the festive season, accelerating vaccination and increasing government spending,” HDFC Bank Chief Financial Officer Srinivasan Vaidyanathan said in a recent earnings call. Economists say that government spending on better health services, roads and infrastructure is important as it drives growth and increases income.
Vaidyanathan said credit is increasing in the retail sector. This is a change in strategy for the country’s largest private lender as it pulled back on retail lending last year.
Overall, personal loans by banks grew by 12.1 per cent in September from 8.4% a year ago, driven by lending for consumer durables, housing, vehicle loans and gold jewelry, according to the Reserve Bank of India. was operated.
And it’s not only banks, but also some shadow lenders – a sector that has been plagued by a damaging default in 2018 – that are keen to jump in by offering loans for as little as Rs 10,000 ($134).
bloombergMumbai-based 24-year-old Youtuber Mehul Kumar recently decided to buy a sports bike by taking a loan of Rs 13 lakh. “Interest rates are low, banks are more inclined to lend during Diwali and the winter season is great for biking. I got my loan approved in just 24 hours,” he said over phone.
‘Gala’ Times
Indian lenders have used the pandemic to bolster their capital base, which is now allowing them to lend exclusively to the domestic sector. Private sector banks, which have been at the fore in raising consumer loans, raised Rs 536 billion in equity funds in the last financial year, while their government counterparts raised Rs 120 billion in capital.
Deepak Gupta, Joint Managing Director, Kotak Mahindra Bank Ltd. said, “At present, growth is looking good across broad sectors, recovery is under control.” Start taking it to the accelerator.”
Rajeev Jain, Managing Director, A.T. Bajaj Finance Limited, there has been a strong revival in growth in recent months, when the second wave was at its peak – a period he described as a “famine”.
“We live in times of some famine and feasting,” said Jain. In the absence of another wave “we are pretty confident about the second half of the year on growth.”