HOME > MARKETS > ECONOMY NEWS
  ECONOMY NEWS
ECONOMY
Credit growth likely to rise to 8-9% in next fiscal year: Crisil
Feb-26-2020

Rating agency Crisil in its latest report has said increased demand for retail loans, strong growth in lending by private banks and pick-up in economic activity may improve credit growth in the next financial year (FY21). The RBI's move to exempt banks from cash reserve ratio (CRR) requirement for incremental credit to certain sectors for up to five years, will also support lending.

According to report, the prolonged slowdown in bank lending may be bottoming out this fiscal, with gross credit offtake set to rise 8-9% on-year in FY21, a good 200-300 basis points (bps) over the likely growth of around 6% this fiscal. So far this year, loan growth has slowed to around 7-7.5 per cent. During this fiscal, some growth momentum is expected in the fourth quarter, after subdued three quarters due to traditional fiscal year ending growth.

It mentioned that retail credit should continue to grow at a healthy rate of around 16 per cent, next year, supported by sustained demand for unsecured loans, muted business growth for non-banks as well as steady levels of pool purchases. Structural shifts such as favourable demographics, rising propensity to leverage for personal consumption, increase in availability of financing, and reasonable risk-adjusted returns for lenders, will continue to support retail lending.

  RELATED NEWS >>