Govt sees ‘hope’ in high retail loan growth
The banking regulator – Reserve Bank of India – however, has asked banks and NBFs to be cautious with personal loans recording high growth.
NEW DELHI: Even as the surge in retail loans, especially housing and vehicle loans, is making the banking regulator uncomfortable, the government seems to be happy as it feels the trend signals strong consumer sentiments.
In its Monthly Economic Review, the finance ministry says that increased demand for housing and vehicle loans reflects the confidence of the households in their future employment and income prospects.
The report pointed out that the magnitude of vehicle loans, an important indicator of growth in private consumption, has been growing at double-digits since April 2022, and housing loans have been seeing ‘a steady double-digit growth’ since May 2021.
“Households are making a smart investment choice of acquiring physical assets, taking advantage of larger credit availability from banks and after a long period of elevated returns in financial assets,” says the report.
It says that the real estate sector has a vast network of forward and backward linkages (such as cement and steel, among others, besides various services), the increase in demand for housing is inducing broad-based growth and job creation.
The banking regulator – Reserve Bank of India – however, has asked banks and NBFs to be cautious with personal loans recording high growth.
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