Trump's tariff may hit Indian banks' corporate loan growth: Report

Caution on the part of manufacturers and bankers could lead to a slowdown in corporate loan growth

US President Donald Trump’s imposition of 50 percent tariff on India could weigh on local banks’ corporate loans despite low exposure to affected sectors, a report by Mint said on August 18.

Trump imposed a base tariff of 25 percent and an additional levy of 25 percent for buying Russian oil. The sectors that will face the biggest blow from the tariffs are – textiles, jewellery, apparel, seafood, machinery and mechanical appliances, auto components and chemicals, the report said.

Major domestic banks such as State Bank of India, HDFC Bank and ICICI Bank have limited exposure of up to 10 percent with the affected sectors, the report said.

However, the tariffs could lead to a slowdown in the corporate credit growth for three primary reasons, according to the report. The factors behind likely slowdown are - banks exercising caution before lending, especially to tariff-affected sectors, companies and exporters pausing expansion plans and slow GDP growth holding back overall system loans growth, the report said.