Mumbai, April 5
Reflecting the recovery in the economy after two years of the Covid-19 pandemic, banks have seen sharp growth in advances by the end of the fiscal year 2021-22.
Ahead of their fourth-quarter results, many banks have released provisional data which revealed that their advances surged by near double digits on a year on year basis by the quarter ended March 31, 2022.
A number of lenders have reported continued demand for loans, particularly from the retail segment, and have noted that the third wave of the pandemic did not have much of an impact on economic activities.
Further, with the doing away of most restrictions, contact intensive sectors such as hospitality, travel and entertainment are also likely to require funding for re-opening and expansion.
Retail loans, which have been the key focus for most lenders, continues to lead the credit growth, but corporate loan demand also seems to be picking up.
“Credit demand from the retail segment, small and medium businesses has been strong, but with the economic recovery in full swing, there is demand coming from other segments as well. Expectations are that credit demand from corporates, which had been largely muted, will also see an improvement in this fiscal,” said an industry source.
Private sector lender HDFC Bank has reported a 20.9 per cent growth in its total advances on a year on year basis by March 31, 2022, IndusInd Bank registered a 13 per cent increase in net advances to Rs 2,39,307 crore in the same period.
On a quarterly basis, IndusInd Bank’s net advances grew by 5 per cent to Rs 2,28,583 crore by December 31, 2021.
IDFC First Bank said its gross funded assets have grown by 12.8 per cent to Rs 1,32,067crore as on March 31, 2022 from Rs 1,17,127 crore a year ago.
Both Federal Bank and CSB Bank also reported over 9 per cent growth in advances by March end 2022 on an annual basis.
While Federal Bank’s gross advances rose by 9.5 per cent year on year to Rs 1,47,644 crore by March 31, 2022, CSB Bank reported 9.1 per cent jump in gross advances to Rs 15,998.02 crore.
Similarly, by the end of the fiscal year 2021-22, Yes Bank’s net advances grew 8.8 per cent to Rs 1,81,508 crore compared to Rs 1,66,893 crore as on March 31, 2021.
“Growth in advances benefitted from two factors. The impact of the third wave of the pandemic on the economy was not as severe as that of the second wave. Also, a lower base would have led to some amount of normalisation of advances growth,” noted Sunil Kumar Sinha, Principal Economist and Director Public Finance, India Ratings and Research.
The impact of the ongoing Russia-Ukraine crisis on the domestic economy is still being monitored and it could have some impact on credit demand also.
ICRA has estimated that bank credit grew by 8.3 per cent in 2021-22 from 5.5 per cent in 2020-21. For the current fiscal, it has pegged bank’s credit growth at 8.9 per cent to 10.2 per cent.
“Banking credit growth would come from non-food segment credit growth which continues to be driven by retail and MSME segments; and partially by co-lending arrangements with non-banking finance companies,” it said on Tuesday.
Improvement in credit demand is also reflected in recent data from the Reserve Bank of India.For the fortnight ended March 11, 2022, credit offtake grew by 8.5 per cent.While credit demand continues to be led by the retail segment, corporate credit demand too seems to be picking up now.