Reform to spur demand, improve credit offtake: Bankers

WITH THE GOVERNMENT slashing goods and services tax (GST) rate across 396 items on Wednesday, banks and non-bank financial companies (NBFC) expect the move to boost credit demand as consumers would have more disposable income at their hands.

- KSHIPRA PETKAR & CHRISTINA TITUS

"Household goods earlier taxed at 12% and 18% will fall under the 5% category, which will provide tangible relief in form of lower cost on essentials and higher disposable incomes. With greater spending power, demand and credit expansion will rise, driving economic growth," CS Setty, chairman, State Bank of India (SBI) and IBA.

Agreeing, Ashok Chandra, MD and CEO, Punjab National Bank, said, "The banking sector stands to benefit substantially from this reform, with expected increases in demand for credit and financial services, particularly in the retail, agriculture, MSME and renewable energy sectors."