Banks Show Revival In Loan Growth Amid Concerns

Indian banks are loosening their purse strings and lending more as pent-up demand surfaces in the Indian festive season, though growth is still nearly half that seen last year. Several lenders including State Bank of India, the country’s largest lender and HDFC Bank, India’s most valuable bank by market capitalisation saw demand for housing and vehicle loans return to near pre-pandemic levels in the quarter ended September. “Now that the loan moratorium is over and we have a clearer view about repayments, we’re feeling more comfortable about lending both on unsecured as well as secured retail loans,” said the head of retail banking at a public sector bank, who asked not to be identified as the lender has yet to report its results.

Hamstrung by the pandemic, banks had been more risk averse in lending, with credit growth slumping to around 5 per cent in the first quarter of the financial year. The uptick spells good news for the Indian economy that had contracted by 23.9 per cent in April-June, during a stringent lockdown to stem the spread of the pandemic.