Banking system likely to have hit air pocket in last fortnight of December 2022: Ind-Ra
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Credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that credit growth in the banking system is likely to have hit an air pocket in the last fortnight of December 2022 with the growth slowing down to 14.9% as of December 30, 2022 from a high of 17.4% year on year (YoY) on December 16, 2022, after rising over 15% YoY since September 2022.
Ind-Ra further noted that credit growth in FY23 is likely to be in high teens of around 17%, an absolute expansion of Rs 6.1 trillion quarter on quarter (QoQ) will be required in 4QFY23 (3QFY23: Rs 6.7 trillion). It said this does not seem like a stretch goal, given the level of economic activity in the system.
As per the report, the non-bank finance companies (NBFCs) and retail segments contributed significantly to the growth in 3QFY23. Continuing inflationary pressures, rising interest rates, and slower deposit growth however could weigh down on credit growth in FY24 as borrowings become costlier.
