Bankers expect credit off-take to be moderated during the next fiscal. With the health of the global economy in jeopardy due to the sudden crises in West Asia and Japan, they feel that further rate hikes by the Reserve Bank of India could be inevitable.
Though international commodity prices are expected to harden and the clear upward bias in oil prices could impact the economy marginally, “credit growth of 20-21 per cent should not be a problem, especially since the banking industry has seen 20-22 per cent credit growth despite repo and reverse repo rates going up by 200-250 bps in the last one year,” Mr H.S. Upendra Kamath, Executive Director, Canara Bank, told Business Line .
“Assuming that rate hikes continue, credit growth will get moderated by 2-3 per cent,” said Ms Shubhalakshmi Panse, Executive Director, Vijaya Bank. The bank expects a 17-18 per cent growth in advances during fiscal 2011-12 fiscal. However, “we don't foresee any immediate impact of Thursday's rate hike,” she added.
Mr Janak Desai, Country Head - Wholesale Banking, ING Vysya Bank, said that with current liquidity rates and input prices, incremental capex commitment will see moderation on a year-on-year basis. “However industrial activity and growth momentum continues to be healthy, which will keep credit growth momentum in tact over next few months.”
With rate hike, borrowing for banks will get costlier, and “naturally the burden will have to be passed on to the borrower,” pointed out Mr S. C. Sinha, Executive Director, Oriental Bank of Commerce. Although “credit off-take has not been very aggressive, we expect to grow by 18-20 per cent year-on-year during this fiscal,” he said, adding that the bank expects about 22 per cent credit growth next year.
On increasing the lending rates, he said that the bank will wait and watch till the credit policy in April.