Retail lending to stay steady in coming quarters: Axis Bank's Pralay Mondal

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Pralay Mondal, Executive Director- Retail Banking, Axis Bank is of the opinion that retail lending will stay steady on the back of demand growth in home loans and gross domestic product (GDP) improvement. Speaking to Nidhi Rai on the sidelines of a product launch, Mondal added that the bank is not seeing any stress in the retail lending segment.

What is your outlook on retail lending? Is there any stress?

No, we don’t see any stress in retail lending. Portfolios of banks are performing reasonably well, (though) some stress is there in non-bank financial company (NBFCs) portfolios. Anyway, that cycle has stopped to a certain extent, but I think from here on it will largely remain stable. If growth in retail credit remains stable, will we will hop on to the segment? The answer is no. It will remain the same and the mix will also remain the same. Maybe a little more growth may come in the housing sector if some of the reforms work out. While the auto sector has been okay in the last two months,  we have to wait and watch and once the GDP picks up commercial vehicle financing will also pick up.

When do you see the GDP picking up?  

GDP will pick up next quarter because of the base effect and one more silver lining is the Rs one trillion GST collections. I somehow think that things have bottomed out and should start improving from here.

Can we say that the NBFC and real estate crises have also bottomed out?

I can’t comment on the stress in the NBFC and real estate sectors because there are too many levers involved. But yes, we can say that there are some green shoots and if for some reason demand starts coming back in real estate, it will give a fillip to growth, as the sector accounts for 50 per cent of retail lending. The industry is facing some stress on the NBFC and unsecured SME front.

How can consumption be pushed? What are the macro challenges you are looking at?

Retail consumption is all about confidence and we need to work on that. I think things will start improving in six months. When I speak to people at the grass-root level, I see the sentiments are improving and interest rates are also coming down which is also a good sign. I think at the current interest rate levels, consumption should grow.

Are you expecting a rate cut on December 5?

A rate cut isn't the solution of the entire problem and just gives some positive sentiment. If the rate cut doesn't motivate the private sector to invest in capex then it does not really help. But yes, it does help sentiment and will also lead to lower lending rates, especially in home loans.



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