State-owned and private bankers are optimistic that banking system credit growth will remain in the range of the 11-15 percent in the current financial year. This is despite it hovering just over 10 percent at the end of the August.
State Bank of India's Managing Director Amara Ram Mohan Rao expects credit growth to remain in the range of 12-13 percent.
"We are optimistic that 12-13 percent is achievable if tariffs issue gets cleared in 1-2 months, or else one or two percent lower can be expected," Rao said at the panel discussion at CNBC TV18's Banking Transformation Summit 3rd edition in Mumbai.
Additionally, Ashok Chandra - MD & CEO of Punjab National Bank, Debadatta Chand - MD & CEO of Bank of Baroda, and Rajneesh Karnatak - MD & CEO of Bank of India, expect a credit growth of 11-12 percent, 13-15 percent, and 12-13 percent, respectively.
Further, Rajiv Anand, MD & CEO of IndusInd Bank, expects credit growth to be at 11-12 percent.
Systemic credit growth stood at 10.03 percent year-on-year in the fortnight ended August 22, signalling that banks are ramping up credit ahead of the festival season amid rate cuts and expected consumption boost following GST regime overhaul.
This the third consecutive fortnight that credit growth remained in double digits. According to Reserve Bank of India (RBI) data, credit growth was at 10.22 percent in the fortnight ended August 8 and 10.03 percent as on July 25.
Deposits grew at 10.22 percent, outpacing credit growth by 19 basis points (bps).
Experts are of the view that the GST cuts have set the stage for a demand revival that could spill over into stronger bank lending even as trade uncertainties and tariff risks continues.
The cuts come weeks ahead of the peak festival period which typically sees an uptick in big-ticket purchases such as vehicles, consumer durables and even homes.
On September 3, the goods and services tax council cut levies on small cars, televisions, air conditioners, textiles and a range of household goods from September 22, in a major rate overhaul aimed at spurring consumption ahead of the festive season, even as Trump's tariffs threaten the country's exports.
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