‘Credit growth in India expected to exceed nominal GDP this fiscal’ Says SBI Capital Markets

NEW DELHI: Credit growth in the Indian banking sector is expected to exceed nominal GDP growth in the current financial year 2024-25, growing at 13-15 per cent, according to SBI Capital Markets.

Nominal gross domestic product (GDP) is growth, without adjustment for inflation. The growth according to the report would be amplified by long-term drivers such as buoyant economic growth, accompanied by formalization, digitalization, and premiumization.

Higher capacity utilization across sectors leading to capex, pick-up in MSME credit, and increased infrastructure and construction activity are expected to boost the industry segment, potentially achieving high single-digit growth in 2024-25, surpassing 2023-24's performance

SBI Capital Markets, incorporated in 1986 as a wholly owned subsidiary of the State Bank of India, is one of the oldest investment banks in India.

"While PSBs (public sector banks) continue to lose share to PVBs (private sector banks), the pace has come down to a trickle as the former are now armed with well-capitalized balance sheets, and a war chest of deposits," said the report released by SBI Capital Markets earlier this week.

Terming banks as the beating heart of the Indian economy, the report said they are seeing excellent blood flow -- record high profits and superlative credit growth. "With the blocks of bad assets cleared, asset quality and capital are in the pink of health. The question arises - will credit growth continue amidst countercyclical operations by RBI, or will there be a shortage of the lifeblood - deposits? Will vitals (asset quality, capital) remain stable, and can the profit pulse race further up?" SBI Capital Markets analyzed some of these aspects in the report. Industry credit has grown at a CAGR (compound annual growth rate) of 5 per cent in the past five fiscals, slower than overall bank credit of CAGR 10 per cent. Interestingly, NBFC credit growth continues to outpace bank credit growth. (ANI)

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