Indian banks get greener light for growth as loan quality improves (Fitch)

Fitch Ratings, a renowned credit rating agency, has highlighted a positive trend in asset quality at Indian banks, indicating a favourable business environment and strengthening banks’ potential for growth.

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According to Fitch, bank loans expanded by 16% in the financial year ending March 2024, mirroring the growth seen in the previous fiscal year and surpassing the compound annual growth rate (CAGR) of 8% observed between 2014-15 and 2021-22.

The report also underscores the notable market share gains by large private banks during the recent credit cycle, continuing their rapid growth trajectory. While state banks have also witnessed a resurgence in lending activity, they have trailed behind their private counterparts in terms of growth.

Notably, retail loans, comprising around 10% of the system loans, exhibited robust growth at a CAGR of 20% since 202021, primarily driven by an increased focus on unsecured credit to enhance margins.