Author: CP

This must come as a surprise to most of our readers as India’s loan growth is accelerating; 22% yoy in Jan-08, which has climbed to 28% currently. But, with a slowing economy, where is this growth coming from ?

RBI data suggests that, Large and medium corporates are borrowing most aggressively, consumer and agriculture are lagging industry growth, while small businesses make up the rear, with negative growth YTD. [This is really bad, Small businesses should be given an opportunity to Grow]. Excluding Oil companies, loan growth remains high at 27% yoy.

Loan Growth is a Big Risk:
The fastest-growing sectors – real estate (46%), construction (56%), iron & steel (34%), credit cards (90%) and financial companies (46%) – are also probably the most risky ones. Infrastructure loans also strong (36% yoy), but have moderated in 2Q09 (3% qoq). While rising loan momentum in the face of falling economic growth / Industrial production data sits uneasy, the sectoral bias of this growth suggests even more caution.

Can Indian banks recover the loans lent to Real Estate and Credit Cards ?

Inflation for the week ended Nov-8 falls further to 8.9% as compared to 8.98% reported in the last week. The prices of primary articles decline to 9.31% for week ended November 8, 2008 as compared to 11.01% for the preceding week.

The prices of fuel items declined to 8.21% for the week as compared to 9.22% in the preceding week. The inflation for manufactured products continued to decline for eleventh consecutive week to 8.02%, as compare to 8.06% for the preceding week.

Amongst the manufactured articles, the prices of metal products, woods products, chemical and chemical products and Beverages tobacco & tobacco products rose the most, by 15.25% yoy, 9.77% yoy, 8.98% yoy and 8.33% yoy respectively.