In a positive outlook for the banking sector, CareEdge has projected that bank credit growth in FY24 is expected to be between 13.0% and 13.5%. This growth is attributed to the expansion of the Indian economy and the increasing digitization of retail credit services.
The analysis specifically notes that this estimate excludes the potential impact of the upcoming merger between HDFC and HDFC Bank. The personal loan and NBFC segments, however, may see a moderation in growth following the Reserve Bank of India’s recent notification regarding risk weights.
Despite these regulatory changes, the report highlights that banks and NBFCs are currently well-capitalized. They possess adequate capital buffers to absorb the impact of these regulatory changes, including those related to ECL computation. As a result, there is no immediate need for these institutions to raise additional capital.
With the ongoing threat of inflation, the Reserve Bank of India is expected to play a critical role in ensuring sufficient liquidity in the market to meet the growing credit demand, says the report.