Indian banks? loan portfolio continued to grew at a steady pace and rose 16.86% as on July 27, data from the Reserve Bank of India (RBI) showed. Banks’ loan book expanded to R46,05,182 crore as on July 27, a rise of 16.86% from a year ago. The growth is a tad lower than the RBI’s projection of 17% for 2012-13.
On the surface, the data seems to bely concerns that companies are reluctant to borrow due to high interest rates. Loan growth has held steady near the RBI’s projection. However, growth was marginally lower than 17.36% seen a month ago. Indeed, loans have fallen by 0.43% in the first four months of the current financial year and the loan book contracted 0.36% during the fortnight ended July 27. This deceleration reflects the seasonal tepidness in loan growth that is a trend of the first quarter of every financial year. Most bankers are betting on a pick-up in the loan growth during the October-March period.
Back-of-the-envelope calculations show that banks need to disburse nearly R8 lakh crore worth of loans by March to achieve 17% growth. With the industry’s loan book contracting in the first four months, the number now looks daunting. Even more so as retail loans may not grow as expected before as the slowdown in the economy, coupled with a weak monsoon, affect consumer demand. Slowdown in retail loans could be driven by most segments, from housing to auto loans. Recently, the country’s largest lender, State Bank of India, said that it has scaled down its growth target for home loans to 15-20% from 25% earlier.
Meanwhile, the growth in deposits continued to lag that of credit and remained subdued at 13.83%. Total deposits were R62,43,960 crore, a growth of 2.15% since April.