HSBC Global Research has forecasted a 12.5% growth in credit for Indian banks in the financial year 2025. However, they caution that a slowdown in GDP growth could pose a risk. The report, dated January 2, 2025, highlights several challenges such as tight liquidity, slow deposit growth, and a high loan-to-deposit ratio.
In November 2024, retail loan growth was driven by unsecured personal loans, home loans, and gold loans. Non-food credit increased by 12.2% year-on-year and 1.3% month-on-month. Retail loans grew by 13.3% year-on-year and 1.5% month-on-month, while MSME loans rose by 13.8% year-on-year and 0.7% month-on-month. Corporate loans saw a 9.6% year-on-year increase.
Home loans grew by 12.2% year-on-year, supported by strong demand for residential housing. However, vehicle loans declined by 1.8% month-on-month due to slow vehicle sales.
Gold loans increased by 6.7% month-on-month, accounting for 12% of incremental retail loans. The report suggests that the slowdown in microfinance loans has led to a rise in gold loans as an alternative borrowing source. Credit card receivables grew by 18.1% year-on-year, outpacing spending growth through credit cards.
HSBC is a big bank that operates in many countries around the world. It provides financial services like loans, savings accounts, and investments.
Credit growth means the increase in the amount of money that banks lend to people and businesses. It shows how much more people are borrowing compared to before.
GDP slowdown means that the country's economy is not growing as fast as it used to. GDP stands for Gross Domestic Product, which is the total value of all goods and services produced in a country.
Liquidity refers to how easily money can be accessed or used. If liquidity is tight, it means there is less money available for banks to lend or for people to use.
Deposit growth is the increase in the amount of money that people and businesses keep in banks. Slow deposit growth means people are not saving as much money in banks as before.
Retail loans are loans given to individual people for personal use, like buying a house or a car. They are different from loans given to businesses.
Non-food credit is the money that banks lend for purposes other than buying food. It includes loans for things like homes, cars, and businesses.
Credit card receivables are the amounts of money that people owe to banks after using their credit cards. It shows how much people have spent using their credit cards but haven't paid back yet.
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