Loan growth is slowing down, although not yet showing strong trends.
Both public and private banks are experiencing similar trends of growth reversal.
The slowdown in loan growth is more pronounced in metro/urban areas, while rural and semi-urban markets are holding up better.
Lenders' intent to lend remains strong, indicating comfort with asset quality challenges.
Loan growth in the government and corporate sectors is slower, with no significant signs of recovery in the corporate sector.
Working capital-linked products are still in demand, but longer-term loans are experiencing a slowdown.
Larger ticket-size loans have not yet seen a significant deceleration.
Private and public banks are showing similar trends in loan growth.
Lenders expect to grow their balance sheets at 12-15% levels in FY2024, with private banks more comfortable in growing their MSME and retail loan portfolios.
Housing loan disbursements have started to slow down, possibly due to increased interest rates, but the flow of credit remains healthy.
Loan growth in the corporate sector could decelerate as working capital demand shifts back to the bond market.
Asset quality and credit costs are expected to remain positive, with no signs of stress in the portfolio currently.
Credit costs will be reassessed if there are any unforeseen developments or regulatory changes, particularly regarding ECL provisions.
Early warning indicators and discussions with companies suggest a favorable asset quality outlook.