Bankers Highly Optimistic About Credit Demand Across Sectors: RBI Survey

Bankers are "highly optimistic" about credit demand across all the main sectors in the short term, a RBI survey of lenders said on Friday.

After sagging for the last two years, the non-food credit growth has been hovering above 15 per cent in FY23. "We observe that bankers are highly optimistic of credit demand across all the main sectors in the coming quarters, viz., Q4:2022-23 to Q2:2023-24," a paper based on the survey released in the February bulletin of the RBI said.

The Bank Lending Survey provides sentiments of banks on loan demand, loan terms, and their outlook in the near term across major sectors. It captures senior loan officers' expectations on future credit demand along with adjustments in its terms and conditions and also seeks feedback on prevailing credit market conditions. The current survey covers a panel of top 30 scheduled commercial banks (SCBs), which account for more than 90 per cent of the total outstanding, it said.

The paper said bankers' sentiments on lending in terms of assessment of credit conditions quickly improved after the adverse reaction witnessed during April-June 2020 and April-June 2021 due to the first and the second waves of the Covid pandemic, respectively. The rebound in assessment was faster in the case of retail/personal loans, it said, adding that these were the sectors for which outlook was severely hit during both the waves of the pandemic.The survey pointed out that banks' sentiments were also observed to be in sync with the SCBs' actual credit growth.

"It is observed that bankers tend to be more optimistic in terms of two- and three-quarter ahead expectations and the one quarter ahead expectations were able to capture the actual credit growth more closely," it said. Expectations on terms and conditions for loans also point to easing in successive quarters, it added.