Mumbai: The credit growth momentum is waning in the country and the crucial non-food loans growth is expected to slip to 10 percent in FY24 from more than 15 percent in FY23, a Japanese brokerage said on Monday.
Ebbing inflationary pressures, especially on the wholesale side which tends to lower working capital needs, and a likely moderation in GDP growth to 5.3 percent in FY24 were cited as the primary reasons for the lower bank credit growth expectation by Nomura.
"We expect credit growth to moderate to 10 percent in FY24 from 15 percent in FY23," said analysts at the brokerage in a report, adding that the base effect will also be partly responsible for driving the number down.
They also said the rate hikes of more than 2.5 percent by RBI in the current tightening cycle will impact credit growth through a lagged impact on borrowings, and already, there are some signs of a dent on the home loan front.
The credit growth momentum is already moderating, the brokerage said, pointing out that the number has come down to 15.4 percent in March as compared to 16 percent in February and 16.7 percent in January. "A further moderation is likely. Underlying credit momentum, as measured by the 3-month SAAR (seasonally adjusted annualised rate) has declined even more sharply to 9.3 percent in March from over 20 percent at end of 2022," it said.
It can be noted that all lenders have been having a great run with high credit growth and lowest stress on the books in over a decade at present.
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