Retail, farm set to drive credit growthin FY23

Strong domestic demand, healthier corporate balance sheets, and a well-capitalised banking sector are expected to steer India towards a 7 per cent gross domestic product (GDP) print in 2022-23.

This is in sharp contrast to the past few years, which were challenging for banks owing to high loan delinquencies. But now, with most of the legacy stress in the corporate loan book recognised, banks have stronger, cleaner balance sheets, allowing them to shift focus back to credit expansion.

Disbursements by banks are likely to outpace those by non-banking financial companies (NBFCs), at 13-15 per cent on-year this fiscal year, vis-à-vis 10-13 per cent in the case of NBFCs.

A large part of this growth will be spurred by the retail segment. In fact, bank credit to the retail segment, which was up 11.5 per cent onyear as of October 2022, is projected to accelerate, rising 17-18 per cent on-year in the current fiscal year, primarily owing to rising demand for home loans.