Bankers choose to stay away from unsecured loans

RBI REPORT ON MACROECONOMIC & MONETARY DEVELOPMENTS IN 2007-08

Year-on-Year variations

Feb 17, ' 07

Feb 15, '08

Rs crIn %Rs crIn % Personal loans5,03,7281,04,22530.658,66913.2 Housing2,51,68846,01925.826,93012.0 Advances against 
fixed deposits42,6713,0188.95,77315.6 Credit cards19,3444,00345.36,50250.6 Education20,4715,17055.35,93840.9 Consumer durables9,3681,72024.25255.9 Source: RBI  ICICI Bank, in its consumer goods financing, has moved from the post-dated cheque system to the credit card payment mode. This has increased the ticket size spending on credit cards. "Overall, consumers are seeing credit cards as a convieneant mode of payment. The spends on cards will continue to see an increase," said the credit card head of a private sector bank.  Home loan portfolio of banks has also seen a slowdown in growth. The portfolio grew at 12 per cent to Rs 26,930 crore as on February 15, 2008, compared with 25.8 per cent growth (Rs 46,019 crore) in the same period last year.  "Rising interest rates have also affected the loan growth in the banking system. The home loan business has also taken a hit on account of the high property prices," said a senior banker. Bank credit growth to the real estate sector moderated to 26.7 per cent as on February 15, 2008, compared with a growth of 79 per cent in the same period last year.  Banks have clearly rebalanced their loan portfolio, which is evident from the rise in credit disbursements to the corporate sector. Disaggregated sectoral data up to February 15, 2008, showed that about 45 per cent of the incremental non-food credit year-on-year was absorbed by the industry compared with 36 per cent in the corresponding period of the previous year.  The expansion of incremental non-food credit to industry during this period was led by infrastructure (power, port and telecommunication), textile, food processing, iron and steel, engineering, chemicals, vehicles, construction and petroleum industries.  The infrastructure sector alone accounted for around 33 per cent of the incremental credit to the industry as against 21 per cent in the corresponding period of the previous year.  The agricultural sector absorbed around 9 per cent of the incremental non-food bank credit expansion as compared with 12 per cent in the corresponding period of the previous year.