Banks returning to retail advances: BL

Fallout of ample liquidity, healthy economic outlook.


Housing loansdriving growth.
Banks are cautiously increasing their focus on the retail segment after a period of going slow on this
business.
Compared with the private banks, public sector banks appear more aggressive on retail business now.
This is due to a variety of factors including the tardy growth in corporate credit offtake, which has resulted in
ample liquidity in the system.
Banks had also reined in credit to the retail sector due to the perceived increased risk on account of the
general slowdown.
Slowdown fear fading
However, according to experts, the scenario is now changing due fears of the economic slowdown fading
away and more importantly, ample liquidity.
?Many banks have now launched marketing campaigns for their retails products such as home loans, vehicle
loans, gold loans/sale of gold coins, educational loans and personal loans,'' an economist with State Bank of
India told Business Line.
According to Ms Renu Challu, Managing Director, State Bank of Hyderabad , a strong focus on retail
advances led to a pick-up in credit growth during October-November 2009.
?Our retail focus has started paying-off. From 3.8 per cent, the advances grew to 9.2 per cent in October and
the November/December figures are likely to be more,'' she said.
The bank, which had done ?significant' sanctions in November, would register a credit growth of 20 per cent
for the year, she said.
Looking up
For most of the banks, housing loans, among others, are driving growth in retail advances. For instance, at
Rs 458 crore at the end of October, 2009, the housing loan portfolio grew by over 87 per cent for SBH.
The year 2009 had, in fact, ended on an optimistic note for housing loans. With many banks offering loans at
rates as low as 8 per cent, this segment is looking up.
With economic growth looking healthy and property prices stabilising, most players are upbeat about good
growth in the home loans segment next year, feel experts.
Public sector banks are also willing to tap the potential in the demand for personal loans though they are
generally being extended to their own customers.
In fact, it is time for the public sector banks to occupy the space vacated by private sector majors.
Private banks, that were aggressive on personal loans till last year, are now hesitant due to high default rate.
They are also reducing their exposure to retail. Other segments such as car loans, gold loans and sale of
gold coins are receiving attention.
The State Bank of India even opened its first exclusive gold coin outlet at Hyderabad.
The third quarter figures would showcase the growing focus of banks on retail more categorically, feel
analysts.