Banks eye retail loan growth again

ICICI Bank on Sunday said it will have a strong showing in car, home and corporate loans business in the current fiscal, but its relatively lower exposure to personal and other small-ticket loans could limit the overall balance-sheet growth to below 20 per cent in the year, reports Mahua Venkatesh.

It is not just industrial credit that is picking up. With the softening of asset prices and fears of job losses easing in the past couple of months, retail customers are beginning to show an interest in taking loans to buy homes, cars and other household items or activities, bankers say.

HT Image

“With the job market showing signs of stabilising in the last couple of months, consumers are beginning to show an interest in retail credit, especially for automobile, personal and housing loans,” said Allen CA Pereita, chairman of Bank of Maharashtra.

Interest rates have also eased with most banks announcing a reduction in their benchmark prime lending rates, which have in turn created an appetite for credit.

Overall credit growth is expected to touch 20 to 22 per cent in the first six months of the current fiscal, bankers said. In 2008-09, credit growth was less than 20 per cent.

While state-owned banks registered a credit growth of 20 per cent in 2008-09, private sector and foreign banks —which have high exposure to retail loans — showed a growth of 11 per cent and 4 per cent respectively.

“We expect credit demand to pick up as sentiments are currently high,” Corporation Bank chairman and managing director JM Garg said.