Growth in the housing and automobile sectors is likely to remain flat in the first six months of 2013-14, according to bankers.
This, along with lacklustre economic growth and high inflation, will find reflection in muted retail loan growth, they say.
According to S. V. Parthasarathy, Head-Consumer Finance, IndusInd Bank, “The retail loan segment will continue to remain under pressure till September 2013.
“The commercial vehicle (CV) segment had seen de-growth in 2012-13, while housing sector lending saw a correction after the boom in 2011-12. The correction is likely to continue for the first two quarters of FY14.”
As per RBI data, year-on-year (y-o-y), bank credit increased at a slower rate of 14.4 per cent in February 2013 against an increase of 15.4 per cent in February 2012.
Jairam Sridharan, Head-Consumer Lending and Payments, Axis Bank, said: “In the retail sector, core assets such as mortgage, housing, auto and credit cards have seen robust growth though it has been lower than in the past few years. The growth may remain stagnant in the first six months.”
Adding to the woes are the CV and consumer durable segments, which saw a deceleration in growth in FY13.
“The CV segment saw repayment risks in the last six months due to a slowdown in the auto sector. The growth in this segment will now depend on the corporate sector,” Sridharan said.
According to K. Subrahmanyam, Executive Director, Union Bank of India, there is no significant additional stress in the retail segment from last year. The housing sector is likely to grow at 15 per cent.
Crisil Ratings in a report said despite a weakness in the CV pools, the performance of other retail asset classes remains stable.