Rating agency Icra has revised its projection for bank credit growth for the current fiscal year to 14.9-15.3 per cent, marking the highest-ever incremental bank credit growth at Rs 20.4-20.9 lakh crore.
This surpasses the previous high of Rs 18.2 lakh crore recorded in FY23 at a growth rate of 15.4 per cent. The agency had earlier estimated a 12.8-13 per cent credit demand for this fiscal. However, it anticipates a slowdown in credit growth to 12 per cent in the next fiscal year (FY25) due to rising global headwinds, a higher base, and challenges in deposit mobilisation.
Icra cites weaker export demand in certain sectors, softer commodity prices, and challenges in deposit mobilisation as factors that could temper bank credit growth in FY25. Despite a strong performance in the first nine months of FY24, with incremental bank credit growth reaching nearly Rs 16.9 lakh crore, the agency notes a relative deceleration in December 2023. Regulatory measures, including increased risk weights on loans to consumer credit and non-banking finance companies, along with tight liquidity conditions, have contributed to this deceleration.
Corporate bond issuances
The agency also estimates corporate bond issuances to reach Rs 9.6-9.9 lakh crore in FY24, surpassing the record level of Rs 8.7 lakh crore in FY23. Additionally, Icra anticipates a record incremental deposit mobilisation in FY24 at Rs 21.7-22.3 lakh crore, driven by a significant accretion of Rs 11.2 lakh crore in Q1 FY24. However, deposit mobilisation is expected to moderate in FY25 to Rs 19.4-20 lakh crore, with a growth rate of 9.5-9.8 per cent, down from the estimated 12-12.3 per cent in FY24.
Regarding non-banking finance companies (NBFCs), Icra expects robust growth in assets under management (AUM) at 14-16 per cent in FY24, with a moderation to 13-15 per cent in FY25. Retail AUM (excluding housing finance companies) within NBFCs is anticipated to grow 21-23 per cent in FY24 but moderate to 17-19 per cent in FY25.
(With PTI inputs)
