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Ahead of the monetary policy statement on October 8, recent data suggest that credit disbursements by banks and NBFCs have made a comeback in the second quarter of the fiscal, although retail credit continues to drive growth.
Bankers and experts suggest that credit demand, especially for the retail segment, will continue to be robust in the coming months due to the festival season and end-of-year travelling plans, though depending on a possible third Covid wave.
The country’s largest private sector lender HDFC Bank reported a 15.4 per cent growth in advances to ₹11.98 lakh crore as of September 30, from ₹10.38 lakh crore a year ago. Retail loans grew by around 13 per cent over September 30, 2020 and 5.5 per cent over June 30, 2021.
YES Bank, which has been working on increasing its retail book, registered a 126.6 per cent jump in gross retail disbursements to ₹8,531 crore as on September 30, compared to ₹3,764 crore a year ago.
Bajaj Finance also reported a robust business update and said it acquired 24 lakh new customers in the second quarter of the fiscal compared to 12 lakh in the same period a year ago.
It booked 63 lakh new loans during the second quarter against 36 lakh a year ago.
Positive sentiments
Mahindra Finance reported a 60 per cent year-on-year rise in disbursements to about ₹6,450 crore in the second quarter of the fiscal. “Subject to improvement in auto supply chain, the company is hopeful of a good third quarter ahead, supported by festival season and harvest cashflow,” it said.
However, many lenders such as the RBL Bank continue to be cautious on disbursements while corporate loans remain muted for most.
The non-food bank credit grew 6.7 per cent in August 2021 versus 5.5 per cent a year ago, according to RBI data.
While loans to large industries contracted by 1.7 per cent, compared to a growth of 0.5 per cent in August 2020, personal loans grew 12.1 per cent against 8.5 per cent a year ago, primarily due to faster credit growth in housing, vehicle loans and loans against gold jewellery.
RBI cues
Experts believe that the RBI will maintain status quo on rates and continue with the accommodative monetary stance as it tries to ensure full-fledged economic recovery.
“New investment announcements, as tracked by the CMIE, has continued to move lower for the quarter ended September, while credit growth remains muted. There may be isolated cases of manufacturers adding capacity – especially in sectors such as cement and steel (driven by global shortages), but the broad indication is for a status quo on capacity, even when real interest rates remain negative,” said a note by YES Bank.
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