PSU banks expect pick up in credit offtake post-Sept

Loan disbursements, which dipped due to economic slowdown, during the nine months ending May 2009, is expected to pick up post-September with an improvement in industrial activities, a top banking industry official said.

"The loan availment (during October-May) was not as per the expectations," Indian Banks' Association's Chairman M V Nair said, adding, with industrial production picking up post-September, loan availability — both working capital and term loans — are expected to pick up.

Though loan sanctions of state-run banks have grown by 50 per cent in October-May, there was very little offtake of loans due to slowdown in the economy, Nair told reporters today.

"Loan sanctions, during October-May, have increased by 50 per cent. This has come from SME, corporate and retail segments. But the loan availment was not as per expectations," he said.

On a year-on-year basis, average loan growth in the banking industry is expected to be around 15 per cent in 2009-10 against an average growth of 26 per cent in the previous financial year, Nair said.

Continuing impact of the economic slowdown is likely to result in a rise in the non-performing assets of banks in the period ahead, but will be under manageable level, Nair, who is also the Chairman of Union Bank of India said.