The credit growth is expected to be better in the next financial year on the back of higher gross domestic product (GDP) growth, according to HDFC Bank Ltd, the country’s second largest private lender.
“If you do have the economy going back to a six per cent-plus growth rate, the financing needs of a growing economy would be met by the banking system. I see no reason why credit growth won’t be somewhere at 16-17 per cent range this year and potentially going up to the higher teens as the GDP growth picks up,” said Paresh Sukthankar, executive director, HDFC Bank.
“As we get into the next financial year, there is every chance that we move to a growth rate which is somewhere between 6-6.5 per cent and potentially thereafter somewhere closer to seven per cent,” Sukthankar added.
There is some willingness to discuss the possibilities of new projects coming up and according to Sukthankar, that is the first sign of the right turn. If people are looking at rate cuts as the main driver of economic growth, that may be asking for too much because the room for rate cuts is probably around 50 basis points for the next year, said Sukthankar.
Economists are also of the view that growth in the economy is finally bottoming out. “We see growth picking up gradually to 6.5 per cent in 2013 and further to 7.2 per cent in 2014,” said Tushar Poddar, managing director and chief India economist of Goldman Sachs on Wednesday. According to Poddar, India's GDP will accelerate from 5.4 per cent in 2012 and shall remain high through 2015-16.