Mid-Sized and Retail Leads in Credit Rebound

Indian lenders are starting to see a pickup in loan demand, with midsize businesses and retail clients at the forefront of a visible rebound in credit.

Bank lending rose 6.8% in October, up from 5.1% in the same period a year ago, the latest figures released by the Reserve Bank of India (RBI) show.

The outstanding loan amounted to 110.5 lakh crore as of October 22, up 7 lakh crore in one year.

The recovery is largely due to the surge in government programs, although large corporations and top-rated borrowers continue to rely on capital markets and foreign money centers where they manage to raise funds at attractive rates. much cheaper. India’s weighted average lending rates were 7.2% in September, according to RBI data.

At the same time, average rates on AAA-rated five-year corporate bonds were 6% and 5.29% for three-year maturities, according to Bloomberg data compiled by ETIG.

The latest industry drawdown flow data shows lending to midsize businesses increased 49% year-on-year to 1.75 lakh crore at the end of September compared to the same period a year ago.

Much of the loans are considered to fall under the Government’s MSME Sector Emergency Credit Line Guarantee Program (ECLGS), under which the government provides a 100% guarantee to banks on credit facilities. eligible that it grants to its borrowers.

In addition, durable consumer loans increased by 40% against 14.9% in the same period a year ago, borrowers benefiting from lower interest rates. With the government’s renewed push on the social sector, infrastructure loans more than doubled to 1,323 crore yen in September, from 1,081 crore yen a year ago.

On the liabilities side, the rate of deposit collection slowed slightly to 9.9%. But the growth of deposits continues to outpace that of credit.

In absolute terms, the banks raised almost double the amount of deposits to 14 lakh crore than the amount they lent during the period.


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