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Bankers’ were very positive about loan demand from all major sectors during Q1 (April-June) 2022-23, according to the Reserve Bank of India’s latest Bank Lending Survey (BLS). However, the level of optimism was somewhat lower than in the previous survey round.
Going by net responses (computed as the difference of percentage of banks reporting increase/optimism and those reporting decrease/pessimism in respective parameters), expectation for “loan demand” for all sectors was lower at 46.6 per cent for Q1 FY23 against 51.7 per cent in Q4 (January-March) FY22.
Within sector-wise loan demand, net responses saw the steepest fall for retail/personal loans at 44.4 per cent in Q1 FY23 against 57.7 per cent Q4 FY22. Manufacturing and agriculture sectors saw a steep fall to 35 per cent (44.8 per cent in Q4 FY22) and 38.3 per cent (44.8 per cent), respectively.
Only the mining and quarrying sector saw an increase in net responses from 14.8 per cent in Q4 FY22 to 18.3 per cent in Q1 FY23. Bankers expect continued easy terms and conditions of loans during Q1 2022-23.
Net responses for “sector-wise loan terms and conditions” for all sectors was lower at 22.4 per cent for Q1 FY23 against 25.9 per cent in Q4 (January-March) FY22.
Expectations for Q2 and Q3 FY23
Loan demand from the major categories of borrowers is expected to improve sequentially till Q3 (October-December) 2022-23, as per the Survey. Going by the net responses, “sector-wise loan demand” for all sectors is expected to improve from 46.6 per cent for Q1 FY23 to 53.4 per cent for Q2 FY23 and to 53.4 per cent for Q3 FY23.
The survey questionnaire is canvassed among major 30 Scheduled Commercial Banks (SCBs), which together account for over 90 per cent of credit by SCBs in India.
BLS seeks to capture the qualitative assessment and expectations of major SCBs on credit parameters such as loan demand, terms, and conditions of loans for major economic sectors.
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