An increase in borrowing cost does not appear to have dented credit demand as leading banks saw robust growth in their retail loan portfolios in the quarter-ended June.
According to the latest RBI data, Indian banks reported 17.3% year-on-year growth in retail loans to 6,95,257 crore at the end of June, compared with 6.6% growth a year earlier. New loan disbursals grew 1.4% in the first quarter against 1.2% growth a year earlier. Home loans, which account for more than half the retail loan portfolio, grew 3.7% to 3,58,828 crore, against 2% rise a year ago.
"Though inflation and interest rates are going up, affordability is also going up as wages are increasing. Moreover, India is reaping the benefit of demographic dividend," said Shamal Saxena, head of retail banking products-India and South Asia at Standard Chartered Bank.
RBI has raised repo and reverse repo rates 11 times in the past 15 months to combat stubborn price pressures.
"The 25-onwards age group is willing to borrow to lead a better life. Many of the second-rung cities too are contributing to as much growth as the large cities. Some borrowers could be also shifting from unorganised sector borrowing to organised sector," Saxena said.
HDFC Bank, the country's second-biggest private lender, saw a record disbursal of new retail loans worth 15,000 crore in the June quarter. The bank disbursed 5,000 crore worth of retail loans per month. During the quarter, the bank raised its base rate by 55 bps to 9.25%.
"The incremental credit growth for the bank is coming from tier-II and tier-III locations. Almost 50% of the new loans are coming from these locations," said Pralay Mondal, country head (retail assets and cards), HDFC Bank.
The largest private lender, ICICI Bank, reported an incremental credit growth of 4,000 crore in Q1. However, the major share of its credit growth was from corporate loans. Axis Bank's retail advances grew 28.25% to 27,022 crore during the period.
Dhanlaxmi Bank MD & CEO Amitabh Chaturvedi says: "There is a slowdown in home loan demand as customers expect home prices to correct. But demand for auto, personal and gold loans continues to be robust."
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