Retail loan growth will continue to remain far from encouraging for banks

Retail loan growth at 9.1 per cent for February 12 fortnight is the weakest so far; Nifty Bank index is up 60 per cent in six months

Loan growth trajectory of banks usually mirrors the country’s GDP (gross domestic product) numbers and this is why bank stocks are often seen as a proxy of economic growth by the Street. However, the recently published GDP data for December quarter (Q3) saw stronger than expected recovery, while the Reserve Bank of India’s data on credit deployment data for the fortnight ended February 12, with 6.6 per cent year-on-year was far from encouraging.

The retail segment (accounting for a fourth of total loans) posted a meagre 9.1 per cent growth – weakest so far in FY21, suggesting that the banking