If you gave that home loan or credit card a skip, you’re not alone. The growth in overall retail loans slipped to 8.5 per cent at the end of February 2009 from 13.2 per cent a year earlier. Home loan growth dropped from 12 per cent to 7.5 per cent on lack of demand, while outstanding on credit cards fell from 51.3 per cent to 8.8 per cent on banks tightening norms.
Overall business sentiment is also down, with an expectations survey predicting a 2009-10 GDP growth rate of 5.7 per cent, against 6 per cent earlier.
Expectation surveys predict a further moderation in economic activity, said the Reserve Bank of India in its ‘Macroeconomic and Monetary Developments in 2008-09’ report, released on the eve of its 2009-10 monetary policy announcement. The demand for retail loans is not expected to return any time sooner as public-sector banks’ initiative in December 2008 to offer loans at 10 per cent had failed to enthuse borrowers, the RBI noted.
The overall loan growth has slowed to 17.3 per cent in 2008-09, much below the RBI’s target of 24 per cent, mostly on account of lending by government-owned banks to the infrastructure sector and oil and steel firms. The results of the professional forecasters’ survey conducted by the RBI in March suggested moderation in economic activity for 2008-09 on the whole.