Country's largest lender, ICICI Bank declares that its advances are likely to rise by only 15% for this year. This figure is a sharp dip from the 55% loan growth reported by the bank two years back.
As on September 30th, the end of second quarter, ICICI clocked only 7.2% growth in its loan portfolio and therefore a 15% growth is substantial from that point of view. Bank's loans for the period between April and September grew by 7.2% to Rs 2,21,985 crore against Rs 2,07,121 crore, a year ago.
The anticipation of 15% growth by the bank gives a clear signal of bank's reluctance to continue in extending to the retail sector. However the Managing Director of ICICI, K V Kamath says that the 15% growth in the loan book would come in spite of the economic slowdown that is taking a toll in the current scenario.
Presently the retail loans account for 55% of the total advances of ICICI, out of which home loans take a lead followed by auto loans, personal loans and credit cards. The growth in the retail loans have been affected badly in the past few quarter due to the rising interest rate and following of stringent lending norms by the bank. ICICI had tightened the lending norms in its credit cards portfolio due to the rising default rate in the country. The bank has even stopped extending for the small-ticket personal loans.
According to analysts, the growth that is seen also comes from the corporate sector which has marked maximum borrowing in the season. "It seems that the bank sees the 15 percent loan growth coming largely from the corporate sector," said a banking analyst.
Also a source from ICICI said that even if the retail lending of the bank declines, the corporate sector lending would balance for the fall. "We do not envisage any major change in the demand for credit," he said.
The companies are expected to look back on local banks to meet their financial requirements in this phase of shortage of funds.
The country's largest lender, State Bank of India (SBI) anticipates its loan book to grow by more than 25% for this year.