Mumbai, September 28 (IANS). According to a new report, retail lending by banks and finance companies in India could triple by 2030. Due to this, domestic debt will increase from about 23 percent at the end of 2024 to 34 percent by FY 2031.
According to the S&P Global Ratings report, finance companies will maintain credit growth stronger than the banking sector, which is expected to grow at 14 percent.
There has been no significant change in the loan book of financial companies. Strong economic growth has supported retail repayment capacity.
“We see the strength in retail lending as a competitive edge, given the dominance of finance companies in certain retail products,” said Geeta Chugh, credit analyst at S&P Global Ratings.
High-end finance companies generally have strong capital levels, which should support loan growth over the next two years and help cushion the downside.
Chugh said the recent action by the Reserve Bank of India (RBI) will reduce overzealousness of lenders, increase compliance and protect customers.
Strong underwriting by Indian lenders will boost asset quality.
The report said this is primarily reflected in their focus on lending to lower-risk customers and generally lower loan approval rates.
Financing for financial companies remains sensitive to confidence levels, but companies with stronger parentage get better access to competitive rates.
And emerging co-lending models are reducing financing pressure.
According to the report, rated and unrated finance companies have strong capital levels to support higher loan growth.
According to the Reserve Bank of India (RBI), the Indian financial system remains resilient and is underpinned by macroeconomic stability.
At the same time, improvement is also continuing in the NBFC sector and urban cooperative banks.
–IANS
AKS/CBT
