PSU banks see uptick in credit demand in vehicle, consumer durable loans post-GST cut, say bankers

The government’s recent reduction in the Goods and Services Tax (GST) has sparked a surge in consumer spending, with state-owned banks witnessing robust demand for retail loans, particularly in vehicle and consumer durable segments during the ongoing festive season, bankers told Moneycontrol.

They added that this spike in retail demand is driving overall credit growth across the financial system and could potentially surpass earlier projections of 10–12 percent growth for the current fiscal year.

“The festive momentum, coupled with the GST cut, has clearly boosted consumer sentiment,” said a senior public sector banker. “We’re seeing strong traction in auto loans and loans for big-ticket purchases like home appliances and electronics.”

The GST reduction has made several consumer goods and vehicles more affordable, prompting higher discretionary spending at a time when the market traditionally sees heightened demand. Dealers and manufacturers have also rolled out aggressive festive offers, further amplifying the credit uptick.