Increased demand for retail loans, strong growth in lending by private banks and pick-up in economic activity are likely to improve credit growth to 8-9 per cent in the next financial year, says a report.
So far this year, loan growth has slowed to around 7-7.5 per cent.
"The prolonged slowdown in bank lending may be bottoming out this fiscal, with gross credit offtake set to rise 8-9 per cent on-year in FY21, a good 200-300 basis points (bps) over the likely growth of around 6 per cent this fiscal," rating agency Crisil said in a report.
During this fiscal, some growth momentum is expected in the fourth quarter, after subdued three quarters due to traditional fiscal year ending growth.
The RBI's move to exempt banks from cash reserve ratio (CRR) requirement for incremental credit to certain sectors for up to five years, will also support lending.
The rating agency said retail credit should continue to grow at a healthy rate of around 16 per cent, next year, supported by sustained ...
