Corporate loan demand in banks has surged during the third quarter, driven by increasing requests from companies in the infrastructure and power sectors. This growth is attributed to the anticipation of a faster-paced economy and the government’s focus on strengthening infrastructure projects.
Lenders report a robust loan pipeline, negotiating corporate loans with a focus on maintaining credit standards. Data from the RBI indicates an overall growth in total bank credit to small, medium, and large industries, reaching Rs 36.65 trillion as of December 2023, compared to Rs 33.75 trillion at the end of December 2022. The positive outlook for the economy and increased investment in infrastructure projects are contributing to the momentum in corporate loan demand.
The Interim Budget has provided reassurance about the continuation of infrastructure spending, presenting opportunities for growth in the corporate book. New initiatives in solar and renewable energy are emerging as additional growth factors.
Companies in the steel and cement industry are also experiencing an uptick in demand, with many utilizing previously sanctioned limits due to strong economic growth.
The Reserve Bank of India (RBI) has raised its GDP growth forecast for 2023-24 to 7%, contributing to expectations of increased infrastructure spending.
State Bank of India’s corporate loan book has shown positive signs, with a pipeline estimated at around Rs 4.6 trillion. Public sector proposals account for 25%, while the private sector dominates the remaining share. In the last quarter, its corporate book saw a 7% growth, followed by a substantial 11% growth in the current quarter.
In the construction equipment sector, steady demand in infrastructure has driven growth, with Kotak Mahindra Bank reporting a 38% YoY increase in disbursements in Q3. The bank anticipates maintaining growth momentum in the last quarter, and the industry is expected to continue on a positive trajectory.