Retail loan demand sees 10-15% growth

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Retail loan demand sees 10-15% growth

Retailers are slowly making their way back to banks to take loans. Bankers say they are witnessing a growth of 10-15% in certain segments, up from single digit or no growth for the better part of 2007. Home loans alone continue to remain sluggish, reports CNBC-TV18.

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Retailers are slowly making their way back to banks to take loans. Bankers say they are witnessing a growth of 10-15% in certain segments, up from single digit or no growth for the better part of 2007.  Home loans alone continue to remain sluggish, reports CNBC-TV18.

The festive cheer could be a turning point for the retail loan segment. Retail or consumer credit, which has been slowing since January this year following the spate of rate hikes, appears to be taking off yet again. Sources in ICICI Bank and several big PSU banks said that since the interest rates were cut on retail loans in mid-October, loan growth has picked up.

Bankers say they have seen a pick up of between 10-15% in the auto, two-wheeler loans, consumer durables, and personal loan categories. However, the demand for home loans still remains low, though rates on home loans were also dropped by half a percent in October.

Bankers said this is because of high property prices. According to RBI figures, bank loan growth, which slipped to 21.9% in September, from 30% a year ago, has risen modestly to 22.5% in the fortnight, which ended October 26.

Bankers said this spurt in loan demand was expected, but it is not enough to deploy all the high cost deposits raised this year. This means banks may have to lower rates further before the end of 2007, if loan demand does not grow faster.

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