Retail lending hit a festive high in September

Bombay : Growth in personal loans jumped 20% in September, the fastest since the covid-19 epidemic in 2020, unfazed by rising borrowing costs, signaling a robust recovery in consumer demand during the holiday season.

Loan demand was seen across all categories for purchases of vehicles, consumer durables and homes, the mainstay of personal credit.

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Home loans, which account for nearly half of all personal loans, rose 16% to 18.05 trillion between September 24, 2021 and September 23, 2022, according to data released by the Reserve Bank of India.

The other personal loans category, which accounts for 26% of all personal bank loans, grew even faster at 24.4% for 9.73 trillion as of September 23.

The personal loan category mainly includes loans for domestic consumption, medical expenses, travel, weddings, other social ceremonies and loans for debt repayment.

Growth in all sub-segments brought total retail loans to more than 37 trillion at the end of September.

“According to the High Frequency Indicators (HFIs) of the past few months, private consumption – especially urban demand – has remained healthy,” RBI Governor Shaktikanta Das said at a conference organized by the groups on Wednesday. pressure Fici and the Association of Indian Banks.

Contact-intensive services continued to make a smart rebound, helped by the unhindered resumption of business and the full-fledged celebration of festivals after two and a half years, Das said.

“You see a huge turnout. We all saw it during Ganpati festival in Maharashtra and other places and Diwali. As the data comes in, we see that retail sales of various white goods and other fast-moving consumer goods have improved significantly,” he said.

RBI data showed consumer durable loans rose 60.7% in September from a year earlier.

Bankers said they witnessed consumer demand across all segments during the festive season as India braced for a full-fledged celebration after two years of muted festivities. Demand for car loans also rebounded in September as part of an 11% increase in sales.

“Not just housing, this time around there is demand for consumer durables as well as car loans,” said the retail credit manager at a public sector bank, speaking on condition of anonymity.

He added that while the retail sector’s asset quality is sound at the moment, the sector needs constant attention to ensure people repay on time.

Mint reported on Oct. 24 that for 13 banks that had reported quarterly results so far, covid-19 overhaul loans worth 10,019 crores – mostly to individuals – went sour in the six months to September 30.

In an Oct. 31 note, analysts at ICICI Securities said overall retail credit growth momentum continues.

From the additional monthly increase in retail credit of 54,100 crore in September, 37% were home loans, 9% car loans, 4% education loans, 7% were fixed deposit advances and 38% other personal loans.

“Over the past 12 months, retail lending has seen an annual increase of 6.1 trillion, of which 41% was for housing, which is lower than its 49% share in total retail sales,” the ICICI Securities report said.

Others said recent industry data on credit deployment showed the wave of recent repo rate hikes had failed to dampen demand.

“While a weak base may be partly responsible, credit growth looks strong this year in the first six months. Other main reasons are a return to pre-pandemic conditions and a recovery in demand. Like our demand should remain fairly insulated from slowing global growth, and with the onset of the holiday season (October to December), we believe credit demand will also remain stable in the second half of the year,” said Sonal Badhan, Economist , Bank of Baroda.

Badhan warned that downside risks could arise from the impact on export demand if major economies slip into recession.

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