The commercial vehicles segment is showing stress. When are you expecting a turnaround Are you becoming more cautious in your lending to the segment
Today, the quality of loans were taking on is the best. The person who takes a loan today has to be sure he has the ability to service the loan for the next 3-4 years. We are not slowing down, but the market has slowed down and our market share has certainly gone up as have the shares of the top five players.
The turnaround was expected this quarter but seems to be deferred in the sense that people are deferring purchase of new vehicles. We do expect a minor uptick in the January-March quarter and substantial a improvement should take place and could take place after the general elections.
Given the macroeconomic environment, what is your outlook on the growth in advances and deposits
Growth in advances surprised everybody in the last three months. You saw highs of 18% growth and that is attributed partly due to the fact that commercial paper (CPs) market dried up and whatever was flowing into the CP market came into the loan growth market.
Last month, loan growth was 14.8%, so I think some of the CPs are back. So I would reckon growth would be around this 14-15% and therefore, our outlook remains in the mid 20s.
Deposit growth is actually faster than loan growth after a long time. And we were up by almost 16% last month, partly due to the FCNR inflows. So as a consequence you also saw C-D ratios have actually fallen, which means there is liquidity, although the cost of liquidity remains high.
What is the kind of demand youre seeing from the corporate side
What has really slowed are the new projects, we are seeing some brown field expansion happening. This is keeping our loan book growing at about 24%. If you look at the credit growth we had in the quarter, the corporate side grew faster than the consumer side. Thats because the vehicle finance slowed down. The book stays diversified and we are not seeing any special growth in any particular area.
What is your outlook in terms of interest rates
I think market was pleasantly surprised by the fact that the repo rate was not hiked at the time of last policy announcement. The subsequent commentary from RBI, that you dont have to react to every small event that happens in the market, is a good sign. I think unless we see a big spike in inflation, which is unlikely, we should see stability in interest rates.