Bank credit is expected to increase 7.5-8% in FY 22: care notes

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Mumbai: Bank lending growth is expected to be in the range of 7.5-8% in FY22 with a low base effect, economic expansion, extensive support for government guaranteed loans and a surge personal credit, said Care Ratings.

According to the rating agency, the medium-term outlook looks promising with less stress on businesses and increased provisioning levels in banks. The personal lending segment is expected to fare well relative to the industry and services segments, he said in a report on Nov. 13.

In the fortnight ended October 22, bank lending growth was 180 basis points (bps) higher than in the fortnight ended October 23, 2020. The year-over-year increase reflects the weak base effect, festival season spending and the easing of lockdown restrictions across parts of India, he said. In absolute terms, credit subscriptions increased by ??7,100 billion in the last twelve months.

“In the midst of the second wave of the pandemic, bank credit growth remained lukewarm due to risk aversion by lenders and borrowers and regional lockdowns imposed by states earlier this year to curb the spread of the disease. coronavirus, ”he said.

However, following the easing of the foreclosure since June 2021, bank lending growth has gradually improved from 5.7% (as of June 4) to 6.8% (as of October 22). Overall growth in non-food credit continues to be driven by the retail, agriculture and related segments, said Care Ratings.

“With the start of the holiday season, bank lending improved thanks to the growth of the retail segment. This increase was supported by rate cuts by banks to stimulate credit to individuals, as several banks are offering home loans at record interest rates before the end of the year holidays, “he added. .

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