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 1. News
 2. Business
 3. Banking and Finance
 4. Credit growth momentum may continue in FY24, say lenders

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CREDIT GROWTH MOMENTUM MAY CONTINUE IN FY24, SAY LENDERS


IN THE FISCAL ENDED MARCH 31, 2023, BANK CREDIT REGISTERED A GROWTH OF 15 PER
CENT COMPARED TO 9.6 PER CENT IN FY2021. IN THE PREVIOUS YEAR, THE OVERALL
GROWTH IN BANK CREDIT WAS DRIVEN BY THE RETAIL SECTOR, WHICH ROSE BY 20.6 PER
CENT.

Written by Hitesh Vyas
Mumbai | Updated: May 14, 2023 05:36 IST

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The bank’s domestic advances grew by 15 per cent in FY2023, with retail,
agriculture and MSME (RAM) book growing at around 13 per cent.

With demand for loans from retail and corporate segments expected to continue,
lenders are confident of registering healthy credit growth in the current
fiscal.

In the fiscal ended March 31, 2023, bank credit registered a growth of 15 per
cent compared to 9.6 per cent in FY2021. In the previous year, the overall
growth in bank credit was driven by the retail sector, which rose by 20.6 per
cent.

“We don’t see any slowdown in credit growth. The demand is there and we keep
continuing with credit disbursal at various levels,” Canara Bank Managing
Director and CEO K Satyanarayana Raju said after the Q4FY23 results
announcement.

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The bank’s domestic advances grew by 15 per cent in FY2023, with retail,
agriculture and MSME (RAM)  book growing at around 13 per cent.

“I don’t see any downward trend in the demand in the retail segment (in FY24),
especially in the housing loan sector. The growth of 14 per cent, which we have
shown in FY23 will be a benchmark for us at the bottom level.  We are confident
that we will grow above that,” Raju said.

The lender expects its corporate loan book to grow at 16-17 per cent in the
current fiscal. It is seeing a huge demand coming from sectors such as
infrastructure, construction, data centre, engineering and chemicals.

Another state-run lender, Union Bank of India, which saw its domestic advances
grow at 12 per cent in FY23, is looking at a similar growth in the current
financial year.

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“We are looking at a credit growth of 10-12 per cent. We are seeing demand
coming from the hybrid annuity model (HAM), renewables, steel and chemicals
segments. In retail, we have got good growth in housing, education, vehicle and
gold loans,” Union Bank’s Managing Director and CEO A. Manimekhalai said.

According to BNP Paribas, with corporate balance sheets de-leveraged to levels
last seen in the early years of this millennium, it creates ideal conditions for
a further acceleration in credit growth.

“Also, prime retail borrowers’ affordability does not seem stretched either —
still low revolver rates for credit cards a corroborating data point,” said
Santanu Chakrabarti, Analyst (Banking and Finance), BNP Paribas India, in a
recent report.

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However, many analysts believe that bank credit may slow down to 10-14 per cent
in FY24. The slower growth in bank credit is on the back of moderation in GDP
growth which is likely to be around 6.5 per cent as against an expectation of 7
per cent in FY23.

Last month, Nomura, in a report, said it expects credit growth to ease to around
10 per cent y-o-y in FY24 from around 15 per cent in FY23.

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It attributed two factors for it – ebbing inflationary pressures, especially WPI
inflation, which should lower working capital needs; and a likely moderation in
real GDP growth to 5.3 per cent y-o-y in FY24, due to global and domestic
factors.

 

© The Indian Express (P) Ltd

First published on: 14-05-2023 at 04:17 IST
 * Tags:
 * Bank credit
 * canara bank
 * MSME sector


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