Nascent recovery signs visible in credit demand | Economic Times

Lenders across the board are seeing early signs of revival in credit demand as the second Covid wave subsides in India, prompting enquiries in segments such as working capital loans, mortgage transfers, securitisation, unsecured borrowing and home loans.Lenders attribute this rise to pent-up demand that could trigger incremental credit growth as lockdowns are eased.“It’s still very nascent but we are seeing early signs of recovery in some loan segments, with working capital and home loans being the strongest,” the CEO of a mid-sized public sector bank told ET. “With restrictions gradually lifting in most parts of the country and improvement in the macro situation, we are seeing credit demand recovery in most segments.”Lenders indicated that fresh requests and sanctions were up by at least 5-10% in June over April and May when the second Covid wave ravaged the country. Analysts tracking the sector also concur that demand is reviving, underpinned by low borrowing costs and improving business sentiment.“Our discussions with regional direct selling agents suggest that pent-up demand for working capital loans is there; this would trigger incremental credit growth post-lockdown,” said Jignesh Shial, analyst, Emkay Global Financial Services. “Although lenders see resilient demand for unsecured personal and business loans, they will prefer to tread cautiously in these segments. Further, considering lower rates and reasonable pricing for real estate, demand for housing loans is expected to remain steady.”For most of the June quarter, lenders had slowed fresh disbursements and improvement in collections remained their top priority. Collection efficiencies that dropped up to 20% in April and May showed signs of normalcy in June with regularisation of economic activity.