RETAIL LENDING COULD BE ON A ROLL IN 2018

Trends in retail lending are believed to be one of the key barometers to judge the pulse of the economy. A tepid trend broadly reflects the lack in confidence of the stakeholders and in agile eco-systems this kind of situation is often taken with uttermost seriousness. Last year, in the retail credit market in the country, the element of buoyancy was a missing factor in an overall sense. Statistics tell the story. According to an official data, bank credit grew at a meager 0.8 percent during the April-October period with major sub-segments like industry, agriculture, services and also personal loans displaying low or even negative growth trajectory. Personal loans (home, auto, education and other needs) account for as much over one-fifth of the total credit doled out by the registered banks and in this segment, the growth witnessed during the first half of the current fiscal amounted to just three percent. Marketmen are attributing a host of factors for the subdued sentiments in the retail lending space. But the primary trigger could simply be dubbed as – pangs of transition of adjustment. The after effect of demonetization late last year and then implementation of GST this year (a momentous initiative, no doubt) saw changing of contours of the broader eco-system of the India economy acting more as hurdles momentarily. And this pushed the larger group of loan seekers in a silent zone for the quite some time. This brings us to the moot point: what could be the possible trends in retail lending in 2018 now that those adjustments are believed to be stabilizing? Will some pent up demand factor come into the play in the new year? Going by the indications from banking and financial markets research quarters, this looks to be a strong possibility and there are a slew of visible triggers. To begin with, if last year had seen a perceptible slowdown owing to demonetization and GST effects, 2017 had also carried forward the soft lending rate momentum and this could come into the play significantly now that stakeholders are more comfortable with the new regime. The retail credit segment is expected to soar again not only just because they can think of tapping the soft interest rate facility but also the enhanced digitized base of the financial system facilitating easier access to the fresh credit. Here growth in smartphone sets in the market (current size in the Indian market is 300 million which is expected to zoom past 400 million by the end of this year or even earlier),  is expected to be a major catalyst allowing every possible future loan accesses with myriads of choices in the form of apps and other interface tools. ‘Housing for everyone’ and a decisive push to affordable housing has been a major push of the current NDA government. But talk to market observers and they will tell you, it has not taken off in a way the government would have desired. Post-demonetization, the real estate sector has suffered a definitive slowdown and realtors have not been able to encash the new opportunity which affordable housing business offers now that other segments have saturated. But a definitive turnaround is expected from this year and that would again propel retail credit in a major way. Realtors are unlikely to hold them back in digging this goldmine and before seeking a new mandate in 2019, the NDA government too like to see its affordable housing mantra having some visible signposts on the growth highway. All in all, enough reasons seem to be on the table to make the retail party in 2018 more interesting than in the immediate past.