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'Bank loan growth expected to be better in FY14'

Source : BUSINESS_STANDARD
Last Updated: Mon, Dec 10, 2012 03:54 hrs

pCredit growth is expected to be better and will move up in the next financial year on the back of higher growth in gross domestic product GDPpp&ldquoIf you do have the economy going back to a six per cent-plus growth rate the financing needs of a growing economy would get met by the banking system I see no reason why credit growth will not be somewhere at 16-17 per cent this year and potentially go up to the higher teens as GDP growth picks up&rdquo said Paresh Sukthankar executive director HDFC BankppAs we get into the next financial year he said there is every chance that of moving to a growth rate somewhere between six and 65 per cent and potentially thereafter in March 2015 be closer to seven per centpp&ldquoThe delta obviously has to come from a recovery in the investment portion&rdquo said SukthankarppThere is some willingness to discuss the possibilities of new projects coming up and according to Sukthankar that is the first sign of a right turnppYet he says if people are looking at rate cuts to be the main driver of the economic cycle it might be asking for too much because the room for rate cuts is probably around 50 basis points for the next year or so &ldquoI do believe that in the next three-five quarters as the liquidity condition eases and there are some policy rate cuts by the Reserve Bank of India as well there is some room for rate cuts&rdquo said SukthankarppEconomists are also of the view that the growth in the economy is finally bottoming and there are expectations of improvement in 2013 &ldquoWe see growth picking up gradually going to 65 per cent in 2013 and further to 72 per cent in 2014&rdquo said Tushar Poddar managing director and chief India economist of Goldman Sachs on WednesdayppHe said GDP will accelerate from 54 per cent in 2012 and remain high through 2015-16ppIn fact a few economists expect growth to start recovering in the second half of the financial year itself &ldquoGrowth appears to be bottoming out and we estimate it to be a tad better in the second half compared to the first half The recent policy activism from the government and a favourable base strengthen this view&rdquo said Sachchidanand Shukla senior vice-president and economist at Axis Capital in his report on Wednesday In the first half the economy grew 54 per centp


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