Credit Growth Continues To Remain Subdued

Systemic loan growth moderated to 5.3% YoY for the fortnight ended 11th Sep'20, according to a report by broking firm Motilal Oswal.

Retail credit growth on the other hand moderated to 10.6 per cent, year-on-year, v/s 17 per cent, year-on-year.

Among retail segments, housing loan growth moderated to 11% YoY (v/s 17% YoY ) while vehicle loan growth moderated to 8 per cent YoY and credit cards grew 13% QoQ (7% YoY growth).

"Industry growth remained muted while that in the Services segment moderated to 8.6% YoY. Agri growth too remained subdued at 5% YoY.

According to our latest discussion with banks, momentum in retail growth is picking up with some segments like tractors, 2 wheelers, gold disbursements and affordable housing seeing the fastest improvement. Overall, we believe recovery in high ticket retail loans, CVs and corporate demand would be much slower. Overall, we believe that loan growth of Private Banks should moderate to 10% v/s 18 projected earlier (pre-COVID) for FY21E. We expect systemic loan growth for FY21E at 4.3% YoY," Motilal Oswal has said in its report.

Bank are expecting credit growth to pick-up ahead of the festive season, though one will have to wait and see. A lot depends on how retail credit pans out in the coming days.