Prospects for bank credit growth promising, to grow 12-13 pc in 2022-23: Report

New Delhi, July 28: The medium-term prospects for bank credit growth look promising with rising personal and wholesale borrowings and a substantial buffer for loan provisioning. Credit rating agency CareEdge estimates the credit growth to be in the range of 12-13 per cent during 2022-23.

“Bank credit growth reached double digits outpacing deposit growth by the end of FY22. The personal loans segment has remained the largest segment, credit offtake from the industrial sector improved after falling in FY21. The private sector banks (PVBs) have continued to outpace the public sector banks (PSBs),” the rating agency said in a report.

However, high inflation and rate hikes by the Reserve Bank of India could adversely impact credit growth.

The prospect for economic growth is contingent on multiple factors such as progress on the Russia-Ukraine war front, the pace of monetary tightening by central banks globally and the overall global economic growth trajectory.

“In India, the credit market is dominated by the banking sector with the bond market still in a developing phase. Consequently, the banking sector’s health is a priority area as it plays a key role in financial intermediation in the economy,” it added.

Bank credit growth has generally been closely linked to the pace of economic growth.