Banks turn the tide with robust loan growth in first half of financial year

Banks have seen their best loan growth in the first half of the current financial year on an incremental basis. Incremental loans in this period amounted to Rs 7.4 lakh crore. This is more impressive when compared to the negative growth seen in loans offered over the last three fiscal years.

The majority of the loan growth has been driven by the retail segment followed by working capital in the corporate segment. Therefore, the capex-based demand is starting to come back but has yet to see real meaningful growth.

Some of the loan growth has also come back for the banks by making inroads into segments which are dominated by NBFCs (Non-Banking Financial Companies). In lieu of the bank loans taken, NBFCs have opted to securitize their portfolio with banks. This has helped some of the banks or the banking sector in incremental loan growth. Thus, deposit growth has been good in this period although the growth rate has come down on a year-on-year basis.