Indian Banks Set for Significant Credit Growth

Indian banks are on a trajectory to achieve a commendable credit growth of 12.5% in the financial year 2025, as per a report by HSBC Securities and Capital Markets (India) Private Limited. Despite potential risks from a GDP slowdown, the sector shows promising signs of resilience and growth.

Challenges and Opportunities Ahead

The report outlines several challenges, including tight liquidity conditions, muted deposit growth, and a high loan-to-deposit ratio. However, the retail loan sector has shown positive momentum, driven by strong demand for personal loans, steady growth in home and gold loans, and a recovery in credit extended to NBFCs.

Growth Across Various Loan Segments

Non-food credit saw a year-on-year growth of 12.2% in November 2024, with retail loans and loans to MSMEs also showing significant increases. Corporate loans experienced a rise, indicating broad-based growth across the sector.

Retail Loan Sector Highlights

Home loans and gold loans have shown remarkable growth, with the latter benefiting from a slowdown in microfinance loans. Conversely, vehicle loans have declined, reflecting subdued sales in the sector.

Looking Forward

With credit card receivables growing and residential housing demand expected to remain stable, the Indian banking sector is poised for continued growth, albeit with an eye on the challenges ahead.