Credit growth of Indian banks is expected to remain range-bound at 12.5% in 2024-25, according to HSBC Global Research. However, the report highlights that a slowdown in GDP growth could pose a downside risk. HSBC Securities and Capital Markets (India) Private Limited, in its January 2 report, attributed the constrained growth to factors such as tight liquidity conditions, muted deposit growth, a high loan-to-deposit ratio, and a potential GDP slowdown.
In November 2024, non-food credit grew 12.2% YoY (1.3% MoM) compared to 12% YoY (0.7% MoM) in October. Retail loans increased by 13.3% YoY and 1.5% MoM, with growth driven by unsecured personal, home, and gold loans. Corporate loans grew by 9.6% YoY and 1.5% MoM, while MSME loans rose by 13.8% YoY and 0.7% MoM. Home loans registered a stable 12.2% YoY growth, supported by healthy demand for residential housing. Vehicle loans, however, declined by 1.8% MoM, reflecting muted vehicle sales. Gold loans surged by 6.7% MoM, accounting for 12% of incremental retail loans, with the microfinance slowdown boosting demand for gold loans as an alternative. Credit card receivables rose 18.1% YoY, exceeding spending growth on credit cards. Despite lingering challenges, the report indicated broad-based growth across most retail loan segments.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.