Rising rates, slow business growth to dent loan demand: The modest recovery in credit growth earlier this month is unlikely to sustain as rising rates coupled with slow business activities and uncertain macro-economic environment are expected to dent loan demand. Some of the analysts even consider the situation to be worse than early 90s, when capital spending and credit demand was significantly weak. "We have lost all hope. Nothing is going to happen till central government elections in April/May 2014 and we are now going to be in an extended period of low growth. Our economist does not expect much recovery in 2013-14 (even 2014-15 is very unclear as of now) and we expect disappointments on all fronts – loan growth, margins and asset quality," Suresh Ganapathy, analyst with Macquarie Capital Securities, wrote in a recent note to his clients. Credit growth recovered to a five-month high level of 16.6% at the start of August after staying below 15% since the beginning of this financial year. Bankers had attributed the revival to strong demand for retail loans.
Posted on: Fri, 23 Aug 2013 09:11:58 +0000
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