Connect with us

The Plunge Daily

Demand for loan picks up, large corporates and borrowers continue to rely on capital markets

Demand for loan picks up, large corporates and borrowers continue to rely on capital markets
With businesses and consumers in recovery mode in the post-COVID world, lenders are witnessing a pick-up in loan demand.

Banking

Demand for loan picks up, large corporates and borrowers continue to rely on capital markets

With businesses and consumers in recovery mode in the post-COVID world, lenders are witnessing a pick-up in loan demand especially from medium-sized firms and retail clients. Latest figures from the Reserve Bank of India show that bank credit rose 6.8% in October compared with 5.1% in the same period in 2020.




The demand is attributed to the push from government schemes, despite large corporates and top rated borrowers continue to rely on capital markets and overseas money hubs where they raise funds at much cheaper rates. The average rates of triple-A rated five-year corporate bonds were at 6% and at 5.29% for three-year maturity.

According to Bloomberg data, the sectoral flow of credit offtake show that lending to medium-sized firms rose 49% year-on-year to Rs 1.75 lakh crore as of end September compared with the same period in 2020. Majority of the lending, as per the report, is under the government’s Emergency Credit Line Guarantee Scheme (ECLGS) MSME sector. The government provides 100% guarantee to banks in respect of eligible credit facilities extended by it to its borrowers.


Also Read: Cinemas to ride on Sooryavanshi wave to pre-pandemic business levels


Furthermore, consumer durable loans have risen by 40% compared with 14.9% in the same period a year ago, with borrowers taking advantage of the reduced interest rates. Now with the government’s renewed support for the social sector, lending to infrastructure has more than doubled to Rs 1,323 crore in September from Rs 1,081 crore a year ago. The report says that the pace of deposit pick-up has slowed marginally to 9.9%, but deposit growth continues to outpace credit growth. And banks has also raised almost double the amount of deposits at Rs 14 lakh crore than the amount they gave during the period.


2 Comments

2 Comments

  1. Pingback: VFLYX plans $3.5 mn investment in drone manufacturing, research

  2. Pingback: VFLYX plans $3.5 mn investment in drone manufacturing, research - Growth Possible

Leave a Reply

Your email address will not be published.

To Top
Loading...