If you are planning to take a loan, this could be the right time. Many banks are lining up special offers to tap into the festival demand for retail loans.

Most of the retail loan campaigns/schemes have already commenced with 0.25 per cent interest rate cut and waiver of processing fee. This will continue this month till Diwali. The banks that did not come up with specific schemes are betting big on recent interest rate cuts and general buoyancy in retail business, including housing loans.

For instance, Andhra Bank launched its ‘Retail Rhythm’ and mega vehicle loan carnival last month, which will continue till the end of this month. It is offering processing fee waiver and a 0.25 per cent cut in housing loans if the borrowers also go in for a vehicle loan.

According to R Bhaskaran, an official at the retail loans division of Andhra Bank, loans sanctioned under this scheme are about ₹475 crore till date. “We are expecting more demand in the coming weeks,” he told BusinessLine here.

Some customer segments are also being targeted specially. Punjab National Bank is offering loans at lower interest rates for central and state government employees as well as customers from the Defence and paramilitary forces.

“Demand for retail loans during this festive season is high. There has been an uptake in housing and vehicle loans,” Santanu Mukherjee, Managing Director, State Bank of Hyderabad, said, adding that his bank will be launching a special retail campaign in a couple of days.

The drivers

In the recent past, almost all banks have been focussing on retails loans. “In the absence of corporate credit offtake, retail loans, if they are qualitatively good, make a good business proposition for banks,” Mukherjee said.

The Reserve Bank of India data too show lack of corporate appetite for credit. Till September, non-food credit grew 8.6 per cent over the last one year to ₹65,51,500 crore. But credit to industry was a shade negative, de-growing at -0.2 per cent over the last one year to ₹26,18,100 crore. However, the situation on the retail loans front has been different.

Retail (personal) loans grew a robust 18 per cent to ₹14,56,300 crore. Within that segment, housing grew at 16.7 per cent to ₹7,86,900 crore and vehicle loans at 21 per cent to ₹1,58,900 crore.

Other personal loans grew fastest at 27 per cent to a level of ₹3,13,100 crore.

The latest 25 bps reduction in policy rates by the RBI also provided some space for banks to pass on the benefit to customers; its positive impact on EMIs is not much though.

Post-policy, many banks have announced rate cuts. These include ICICI Bank, Bank of India, Bank of Maharashtra, Punjab and Sind Bank, and Indian Overseas Bank. State Bank of India has hinted at likely rate cuts in the near future.

This is expected to see more customers taking loans in the current season, say bankers.

In the last two quarters of this fiscal, all leading banks have registered substantial growth in retail lending.

SBI’s retail portfolio had grown 20 per cent in the first quarter compared to the year-ago period. This was driven by home and auto loans, followed by personal loans.

So has been the case with, among others, ICICI Bank and HDFC Bank.

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