Lenders pin their hopes on deferred demand for loans

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Bankers anticipate stronger lending growth in the coming quarters, hoping that pent-up demand created by months of pandemic-triggered restrictions will spur spending on goods and services.

Their predictions are also based on an optimistic approach to vaccines, although certainly less than 5% of Indians have received both Covid shots so far – far from the “critical mass” that bankers hope to see.

While a lot depends on whether the third wave hits India and how it ends, lenders are almost certain that a loan is already possible. However, demand for corporate loans is not expected to grow anytime soon – rather, they say, retail loans will be at the forefront of lending growth. In 21 fiscal years, the volume of loans to industries remained practically unchanged, increasing by 0.4% to achieve RR 29.2 million, while retail loans rose 10.2% to 28.1 lakh crores, data from the Reserve Bank of India (RBI) showed.

“Our internal assessment is that if the third wave is not as bad as the second, credit growth will accelerate. Consumers have been locked up for the past several months, and we believe that when the restrictions are completely lifted and vaccinations reach critical mass, they will be eager to spend and borrow to fulfill their aspirations, ”said the executive director of the state bank.

To date, 55.2 million people have been vaccinated with two doses of Covid vaccine in India. On June 21, the number of shots fired peaked at 9 million per day, but it has now stabilized. On June 26, 6.4 million doses were administered in the country, data showed.

The bankers said they were able to weather the first and even the second wave of Covid with the support of the central bank and government. Fiscal year 22 won’t be that different, they said. For example, in fiscal 21, the domestic loan portfolio of the State Bank of India increased by 5.7% to Rs 21.8 crore This was higher than the 4.9% growth in non-food loans in the banking sector over the same period.

“The bank has adapted to the challenges posed by covid and is better positioned to tackle any subsequent wave. I am cautiously optimistic that the dynamics of indicators for 21 fiscal years will continue in 22 fiscal years, ”said SBI Chairman Dinesh Hara.

Despite growing optimism about the future, things don’t look rosy. Outstanding bank loans contracted in the first two months of the fiscal period as credit growth faded into the background.

The total volume of non-food loans decreased by 0.8% from April 9 to June 4 to 107.5 lakh crores, RBI data showed. In absolute terms, this means a reduction Rs 86,000 Of course, non-food loans in the past year declined to a greater extent due to the first wave of the pandemic. In the period from April 10 to June 5, 2020, it decreased by 1.16 crore lakh. Economists said that although the loss of life was significant, the economic impact was better contained.

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