Credit Suisse sees personal loans accounting for 60% of credit growth in banks

Neelkanth Mishra, managing director and India equity strategist at Credit Suisse, on Tuesday, said that 60 percent of banking loan growth is coming from personal loans. Mishra also said that pent-up demand will be a significant growth driver in India.

Speaking in an interview with CNBC-TV18, he said, “There will be pent-up demand and that’s undeniable. I think the economy is well prepared for a sharp bounce and when some of the business groups announce diversification plans and such activities pick up, there will be a lot of frantic activity in the private equity space. So, the growth going forward is going to be better. Therefore, there is a lot of pent-up demand showing up in what we are seeing right now, but the bigger question for the market is sustained growth and how close we get to the pre-pandemic path, I am a lot more optimistic than where I see the consensus.”

“If you see the loan trends by duration, you will find that decline has been in loans, which are less than one year in duration or one-three year in duration; 36 percent of the outstanding loans in the banking system are of loans, which are less than one year in duration and they have a visible correlation with nominal GDP growth. So, if nominal GDP starts to pick up, the growth in those loans is going to rebound. Therefore, some of the growth numbers for banks are going to revive,” said Mishra.