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Banks hope for strong credit demand this festive season
NEW DELHI: As the festive season kicks-in next month, the country’s lenders are doing the mathematics about the discounts and freebies to be offered on housing,
NEW DELHI: As the festive season kicks-in next month, the country’s lenders are doing the mathematics about the discounts and freebies to be offered on housing, consumer goods and car loans, to woo the prospective buyers.
Banks are looking at an opportunity to tap the 4.8-million central government employees, and 5.5 million pensioners, whose pockets have got deeper after the Centre approved a 23.55% hike in their salaries based on the recommendations of 7th Pay Commission .
Besides, with a good monsoon after two years, rural demand is expected to be buoyant, and banks are hoping that this festive season will bring cheer and credit demand will pick up.
Several public and private sector banks said discussion on offers are on, but will be announced by September-end.
“Most banks will explore and examine what best can be offered. Besides, lowering rates for home and auto loans, there would be a host of other waive-offs and discounts,” a senior official of Punjab National Bank told HT on condition of anonymity.
A Reserve Bank of India report recently said credit growth of scheduled commercial banks stood at 9.2% in the quarter ended March 2016. However, the growth was primarily due to the performance of the private sector lenders.
“Demand for credit is expected to increase with the wage revision after the 7th Pay Commission recommendations being accepted, and from the rural sector after good monsoon,” said Soumya Kanti Ghosh, chief economic adviser, SBI.
Raghuram Rajan, the outgoing governor of the Reserve Bank of India, kept the repo rate — the rate at which banks borrow from the central bank — unchanged at 6.5% in his last monetary review announced on Tuesday. The RBI had cut policy interest rate by 25 basis points in April, bringing it to 6.5%, the lowest since January 2011. However, banks have come under fire for only partially passing on the benefit of low interest rate to the loan customers.
