Credit information company Cibil said even though the number of people approaching banks for loans has increased since the demonetisation drive, the credit granted continues to be in the negative territory, reported PTI.
"We are clearly seeing a divergence between consumers who have shown increased demand for credit, and lenders, who have scaled back their originations since the demonetisation announcement," vice-president Amrita Mitra said.
The credit granted to retail borrowers decreased by 13.7 per cent in November 2016, followed by 7.5 per cent in December 2016 and 12.3 per cent in January 2017.
Even as banks say there is abundant liquidity, Cibil data findings reveal that the dip in credit granted is not a consumer demand issue but "lender supply" problem.
"In the light of the generally stable consumer credit performance post-demonetisation, this lender retrenchment may be unwarranted," she added.
The demand for retail credit which is measured by the increase in inquiries over the same month the prior year, which was impacted by the note ban, has "largely recovered" and the asset quality is also holding on, it said.
"Consumer loan demand, which had seen a significant drop compared to prior months shortly after demonetisation announcement, has largely recovered," it said in a statement.
Initial indications of credit quality across portfolios show no immediate signs of deterioration, it added.
She said the government's surprise move had created short-term disruption in the demand for consumer credit, but the new data is showing a "strong rebound" for retail loans.
While there was no growth in retail credit demand last November over on a y-o-y basis in the immediate aftermath of note ban, the demand grew nine per cent in December and the pent-up demand accelerated it to 25 per cent in January before coming down to 15 per cent growth in February.
This shows a "material growth" in the opportunities retail credit sector and is a promising indicator for the stability and growth prospects of our country's credit industry and the economy overall, Mitra said.
"More significant is the fact that loan performance has remained stable post-demonetisation, demonstrating the resilience of consumers," she added.
On the delinquencies front, it said a comparison of bad assets in December 2016 over the year-ago period shows stability on the overall level with improvements in auto and credit card delinquency rates.
There has been some deterioration in two-wheeler and housing loans, it said, adding "lenders may have curtailed origination activity in anticipation of a significant rise in delinquency, but to date we have not experienced that deterioration.