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Banks slash retail lending


Banks slash retail lending

Last updated: February 21 2007
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  • Banks slash retail lending

    Figures suggest that much before the Reserve Bank of India (RBI) tightened liquidity to tamper credit growth through a hike in cash reserve ratio (CRR), banks have started going slow on retail loans.
    At the same time, loans to corporates have gone up by higher amounts than retail loans this year. According to the latest RBI figures, banks gave Rs 1,01,631 crore in retail loans in one-year period between October 2005 and October 2006 amounting to a growth of 34.3% as against Rs 1,04,058 crore lent between June 2005 and June 2006 amounting to 34.3%
    Like commercial banks, housing finance companies (HFCs) too have been witnessing a slowdown in disbursal.
    “This is not a comfortable situation for the economy as a whole. A lesser growth in personal loan and home loan segments indicates a lower consumption level and a slowdown in construction activities. This is bound to affect the economic growth adversely.
    However, there is some optimism displayed by some bankers. With the income generating capacity of the youth having gone up substantially, they will keep their demand for retail loans. High interest rates may only defer their plans temporarily.
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