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Retail loans show healthy growth in second half of FY 21

Retail credit growth shows a pick up

After a dip in the first half of 2020-21, systemic retail loan growth trend showed an upward movement and remained healthy in the second half. Overall trend in retail loan showed an increase of 9 per cent compared to the same period last year.

Mortgage grew at 8 per cent year on year amid the festive cheer, a report by Emkay said.

Systemic monthly mortgage disbursement in February was high at Rs 750 billion against Rs 400 billion, mainly due to pent-up demand driven by benign interest rates, attractive property prices, low stamp duty (temporary though in Maharashtra) and change in customer behavior to house ownership or bigger house size.

Raoul Kapoor, COO of DSA (direct selling agent) major Andromeda Marketing said that the surge in housing demand is expected to remain positive for an otherwise weak real estate market.

The report also noted that with non-banking finance companies (NBFCs) are still “in the slow lane” which has pushed businesses for big banks – both public and private — in the home loan market.

Among large players, the State Bank of India (SBI) leads the pack with nearly 31 per cent market share in recent disbursements, followed by the HDFC group at 19 per cent and ICICI at 13 per cent.

The report added that overall retail credit growth is expected to accelerate further, led by mortgages — contributing 51 per cent of retail loans– and back-end support by unsecured cards, personal and vehicle loans. The current market conditions favour banks armed with lower funding rates, strong balance sheet, better asset quality and strong captive customer base, it said.