Demand for retail credit wanes owing to weak industrial borrowing
The retail credit remained strong with 12% on-year growth, however the pace has decelerated from 2.6% in July to 1.2% in August on a MoM basis
According to the latest data from the Reserve Bank of India (RBI), the demand for home loans has lost steam after posting a strong growth last year. This is due to a weak high-value borrowing from industries, and is a must for a robust revival in demand for debt funds, The Economic Times, reported on Tuesday. To boost credit growth and broad based expansion owing to the trickle-down effect of loans to companies, demand from industry is important as per analysts.
The retail credit remained strong with 12% on-year growth, however, the pace has decelerated from 2.6% in July to 1.2% in August on an MoM basis. On the other hand, 0.2% MoM, while it went down by 2.6% on-year to date.
Iron and steel and road sectors looking for loans
Many companies continued to deleverage especially from key sectors like iron and steel, cement, telecom, sugar, roads, airports, railways, ports, plastic and its products and mining. The publication also added that revival in consumer demand and rise in government spending can be potential triggers for industrial growth, which will be a key driver for credit growth in the coming years.
However, bankers are already seeing initial signs of a rebound in corporate credit, with investment proposals from sectors like iron and steel, where companies are looking for fresh loans. The road sector has also been doing well, and they continue to receive proposals, which will eventually drive the economy.