Retail loans grew at a faster pace in September compared to last year, according to the latest data from the RBI, as lenders tried to expand their retail portfolios at a time when demand from the corporate segment remained weak.
In September 2013, retail loans grew 17.9% to R 9,65,300 crore compared with an increase of 13% in September 2012. Loans to the housing loans segment, the largest part of the bank’s retail portfolio, grew 20% to R5,05,600 crore against 11.3% in the year-ago period.
The pick-up in retail credit may extend to October with banks pushing festive season offers on consumer durables and auto loans. The country's largest bank, SBI, cut its interest rates for car loans to 10.55% in October. SBI also cut the processing fee from 0.51% of the loan amount to a flat rate of R500. Punjab National Bank, as part of its festive schemes, cut its interest rates on car loans to 10.65%. The bank also cut its interest rates on two-wheeler loans to 12.2% and interest rates on personal and consumer durables loans to 12.75%.
“You might see a perk up in demand for loans during Diwali and, again, in Christmas and New Year. But for loans that are investment-linked, the demand will be low. There are some signs that infrastructure projects are getting cleared. So, you might see an increase in demand there later. For now, with the good monsoon, credit will be driven by consumption-based lending,” said a senior official at a private bank.
The RBI data also showed that credit card outstanding amounts grew 2.1% to R23,500 crore compared to 21.8% in the same period last year. On a year-on-year basis, non-food credit grew 18.2% in September 2013 compared with the increase of 15.9% in September 2012.
Industry credit grew 17.6% to R23,71,500 crore compared with an increase of 17% in September 2012. The RBI release said that an "acceleration in credit growth to industry was seen in all major sub-sectors, barring engineering, construction, glass and glassware and mining and quarrying.” Credit to the services industry grew the fastest at 22.1%