Retail credit growth in the country moderated to 10.6 per cent year-on-year for the fortnight ended September 11 versus 17 per cent in January with home loan growth moderating 11 per cent, according to Motilal Oswal Institutional Equities.
Vehicle loans moderated 8 per cent year-on-year. On the other hand, credit card growth revived sequentially at 13 per cent quarter-on-quarter versus 7 per cent year-on-year growth, said Motilal Oswal.
Overall, the share of retail in total systemic credit stood at 28 per cent as compared to 20 per cent four years ago.
Some banks have indicated that segments like tractors, two-wheelers, gold disbursements and affordable housing segments are seeing the fastest improvement while the recovery in high ticket retail loans and commercial vehicles will continue to remain soft.
However, large-scale industry growth remained flat. Medium-scale industries grew 2.8 per cent year-on-year while trend in micro and small segment declined at minus 1.2 per cent year-on-year.
Further, growth in the services sector moderated to 8.6 per cent year-on-year while agri growth remained muted at 5 per cent.
Among sectors, loan growth in commercial real estate sector came in at 6.6 per cent year-on-year. In the non-banking finance companies (NBFC) sector, it stood at 17 per cent year-on-year.
Deposit growth for the fortnight stood at 12 per cent year-on-year. The outstanding deposit base reached Rs 142 lakh crore. Most banks are currently focused on garnering deposits (particularly CASA and retail term deposits) to ramp up their liability franchise and reduce reliance on bulk deposits.
Further, systemic commercial deposits ratio stood at 72 per cent versus 76 per cent in March. "We expect it to further decline as we project systemic loan growth for FY21 at 4.3 per cent as compared to 5.3 per cent currently." Motilal Oswal said the continued monetary easing has resulted in lending rates plunging to all-time lows. Large banks with strong liability franchise will continue to gain incremental market share and are better placed to tackle the margin pressures.