Bank credit is likely to grow at the highest four years 11-12 percent in the 2023 fiscal year, behind better economic growth and budget support from the government, according to a report. In the fiscal ended in March 2022, the bank down payment might have grown 9-10 percent.

Healthy economic growth and budget support from the government must raise bank credit growth of 200-300 base points to 11-12 percent of this fiscal,” Crisil Ratings said in the report. Higher credit growth expectations are also supported by increasing the security of the banking system, he added.

The Senior Director and Deputy Chief of Krishnan Sitaraman ranking officer said that the biggest difference expected by this fiscal was an increase in the company’s credit growth track, which was likely to double to 8-9 percent. “The Union Budget Pegs Public Capex Expenditures around RS 7.5 Lakh Crore, a significant increase during the last fiscal, with a sharp focus on public infrastructure. The impact of the downstream on the core sector, along with the incentive scheme related to production (PLI) production (PLI) production (PLI) production (PLI) production (PLI) production (PLI) production (PLI) Production -related production (PLI) production production production is announced for 13 main sectors, will become a driver, “he said.

Sectors that should see maximum growth, given the dynamics of industry, including metals and metal products, chemicals, techniques and construction, he said. The report said the bank advanced to micro, small and medium enterprises (MSM) could grow 12-14 percent of this fiscal, driving the multiplier effect of several pick-ups on capex.

This segment has seen higher credit growth in the last few quarters because the Emergency Credit Guarantee Scheme 2 (ECLGS 2). Home loans, which form the largest retail loan discount, will be the main driver of credit with housing purchases which are expected to continue in this fiscal solid clip, the agency said.

At the same time, unsecured loans will also see some surges because the lender continues to find this attractive segment based on a return that is adjusted to the risk. “Overall, the growth of retail books will remain stable in 14-15 percent of this fiscal, he said.

The growth of agricultural credit, which is expected to grow in 9-10 percent in the 2022 fiscal year, will remain stable in the current fiscal with the hope of normal monsoon. Director of Crisil Sri Naran Service said the country’s banking sector was structurally stronger today, and was well positioned to fund faster credit growth.

Buffer capital is healthier with all public sector banks that have a cushion of at least 100 bps above the regulatory requirements, while private banks continue to be solid in this score. Secondly, the profitability metric is at the highest 9 years,” he said. Nals said the quality pressure of assets was reduced with dirty NPA sectors which might decrease around 500 bps from their 2018 peak, due to an increase in the company’s book.

The report, however, said a new surge in the Covid-19 case, a prolonged Russian-Ukraine War and a higher slowdown than expected in private consumption are three things to be carefully monitored.