Loan recovery, a big question to Indian banks!

May 25, 2015 13:09
Loan recovery, a big question to Indian banks!

In the first quarter of this year, even the economy is expected to have outpaced China, the loan recovery issue is going to be long term problem for the Indian banks. 

Tragic growth rate in lending!
According to the fiscal year that ended on March 31, the lending growth rate was 12.6 percent. In fact, this is the lowest growth rate when compared to the lending growth rates from the past two decades.

Basing this, few of the top bankers said that they had seen an increased level of inquiries from firms and individuals. Even though though, there was no substantial rise in loans, which means the full recovery could still be far away, as India's debt burdened firms are still struggling.

Pickup in next two quarters - Arundhati Bhattacharya, chairman of SBI

"The project pipeline which was very, very thin even last quarter, we are now beginning to see more and more projects coming in," said Arundhati Bhattacharya, chairman of State Bank of India.

"My own anticipation is another two quarters down the line we should definitely begin to see this pick up happening, and the last quarter of the financial year... should be quite good", he further added.

Bhattacharya further opines that there might be a loan growth of 14 per cent for the current financial year to March 2016 for SBI.

In the past five years, India's firms have seen a debt levels nearly triple but after two years of economic expansion, those firms are struggling to digest debt on their balance sheets.

By Phani

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