Retail lending is expected to increase during the festive season

- Strength in the balance sheets of banks will slow down but will not stop

Banks are preparing to announce various schemes in the coming festive season to increase lending in the country. The finance minister has instructed bankers to conduct liaison programs to increase lending, but before launching the program in October this year, banks are focusing on increasing lending, especially through retail and micro-enterprises, during the Ganpati festival after Onam. Is.

The focus is also on export lending in view of the global recovery, a senior SBI official said. Demand for this specialty has grown significantly as a result of recent corporate scandals.

The festive season has begun with Onam in the south. Demand for retail credit in Maharashtra is likely to increase during the Ganpati Utsav next month.

Banks also currently have ample liquidity due to various schemes of the Reserve Bank. According to the Reserve Bank of India (RBI), retail loans grew by 11.50 per cent in June this year. The increase was due to an increase in loans for vehicles, a banker said.

During October-March 2017-20, banks disbursed a total of Rs 3.50 trillion in loans to the retail, agriculture and MSME sectors through the liaison program.

The second wave of the Corona virus poses risks to banks' loans to retail and micro-enterprises, but strong provisioning will help banks withstand the pressure and stem the rise in bad loans, according to a report by ratings agency Moody's.

"Increasing banks' profits and capital and loss buffers will protect them from possible risk against loans and maintain the lending capacity of banks," the rating agency said in a statement.

The continued support provided by the government will help stop the rise in distressed loans.

Although the repayment of loans provided to individuals and small businesses is likely to be at risk, the asset quality of banks is not widely seen to be deteriorating. The second wave of Corona has had a serious impact on the income of individual and small business houses.

The government's initiatives, such as the Emergency Credit Linked Guarantee Scheme, have helped small businesses access immediate liquidity, the ratings agency said in a statement.

In addition, accommodating interest rates and loan restructuring schemes are also easing the risks against assets. Corona's illness The balance sheets of banks that began to strengthen before the epidemic will slow down but will not stop, the statement said.