It will take some more time for credit offtake to pick up, Dhiraj Relli, MD & CEO, HDFC Securities, said.
While the retail credit portfolio will continue to grow, lending to the corporate sector will be low as no new investments are taking place, particularly in the private sector.
According to Relli, lending to agriculture, personal loan, housing and other mortgage loan has been growing at a healthy double digit ratio and will continue to grow moving forward.
“However, lending on corporate side will remain low till investments start picking up which will happen only once capacity utilisation starts improving from the current levels,” Relli said at a media round table here on Wednesday. As on July 2017, personal loans have grown by 15 per cent, housing loan by 10.5 per cent, vehicle loans by 9.6 per cent and agriculture loans by seven per cent on a year-on-year basis, he said.
On the other hand, credit to industry witnessed de-growth of 0.3 per cent on a year-on-year basis. While textiles grew by 0.8 per cent, there was a negative growth in metal, gems and jewellery and infrastructure sectors.
Talking about the impact on bank’s margins, he said, banks, which are heavily dependent on corporate lending, might see some impact of the poor credit offtake. However, this could be partially offset by a reduction in cost brought about by an inching down of savings bank and term deposit rates.
“Nearly ₹106 lakh crore is locked up in bank deposits, of which close to ₹30 lakh crore is in savings bank account. Most banks have reduced rates by about 50 basis points and this will have a positive impact on their bottomline as it will give them a leeway to price their deposits properly,” he pointed out.