First Quarter Personal Loan Growth Expected to See Slideshow – The New Indian Express
Express news service
NEW DELHI: The first updates for the June quarter from two private sector lenders – HDFC Bank and Yes Bank – gave credence to the recent remark by members of the RBI Monetary Policy Committee that “the bigger balance sheet of the second wave is in terms of shock demand.
India’s second-largest private lender HDFC Bank on Friday said it recorded a 30.24% contraction in retail disbursements, while retail disbursements for Yes Bank fell 34.86% in June through compared to March 2021. The breach is much deeper for Yes Bank as it experienced a decline in the overall loan portfolio even from last year’s low base which was hit hard by a tighter foreclosure.
When the first wave of the pandemic subsided, the economy recovered quickly, and in large part, due to pent-up demand and higher consumption discretionary. In fact, demand increased so much that India recorded GDP growth after just two quarters of contraction – an impressive feat for a country that had been in lockdown for months. However, as the second wave devastated family budgets, many were forced to divert their money to rising health care costs. In addition, higher inflation across all categories, soaring retail fuel prices coupled with weak sentiments and lower incomes have resulted in a slowdown in consumption that overshadows the base effect. The impact has been visible on the growth of personal loans.
In a regulatory filing, HDFC Bank said growth in its overall advances stood at Rs 11.47 lakh crore at the end of the June 2021 quarter, representing growth of nearly 14.4%, driven by growth loans to individuals. The bank’s overall advances increased 1.3% from Rs 11.32 lakh crore as of March 31, 2021. Among loan categories, personal loans increased by about 9% compared to year before, but are down about 1% from March 31, 2021.
Retail disbursements during the quarter amounted to Rs 43,600 crore, lower than the Rs 62,500 crore disbursed in the previous quarter, mainly due to the negative impact of the second wave. As a result, the outstanding retail loan portfolio contracted by 1% on a sequential basis. For Yes Bank, however, even this optical improvement was no relief. The private lender reported a 0.4% year-over-year contraction in its overall loan portfolio, while the loan portfolio recorded a 1.8% decline in a seasonally weak June quarter. Yes The bank disbursed Rs 5,099 crore in retail loans during the June quarter against Rs 7,828 crore in the previous quarter.