Care pegs FY14 GDP growth at 6%, credit pick-up at 18-19%
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Care pegs FY14 GDP growth at 6%, credit pick-up at 18-19%

Last Updated: Wednesday, March 20, 2013, 21:05
 
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Care pegs FY14 GDP growth at 6%, credit pick-up at 18-19%
Mumbai: Ratings agency Care on Wednesday pegged India's FY14 GDP growth at 6 percent and said the expansion over the current fiscal will also boost bank credit.

The GDP expansion will improve to 6 percent from 5 percent expected in FY13, the agency said, adding the increase in economic growth will lead to an uptick in bank credit growth to 18-19 percent from the present 16 percent.

On the deposits front, it said the mobilisation will increase 17-18 percent next fiscal over the current one.

The Central Statistical Office last month pegged the GDP growth for the ongoing fiscal at a decadal low of 5 percent. A slew of factors like slowdown in the developed countries and domestic problems like high interest rates and a policy paralysis are being blamed for low economic growth.

Care said majority of demand for loans will come as working capital requirements but project finance will continue to stay impacted till the end of September due to a moderation in the investment cycle.

However, the agency sounded bullish on housing, saying the Budget proposals of increasing deductions in taxable income on interest payments and softening of interest rates will help the sector, especially in small cities and towns.

Banks cutting interest rates may see a 0.05-0.10 percent shave off in the net interest margins as the cost of deposits are not expected to soften due to the high credit deposit ratios and expected credit growths, it said.

On asset quality, the major frontier for banks in the times of a slowdown in economic activity, Care expects the gross non-performing assets ratio of lenders to go up to 3.8- 3.9 percent of advances, while restructured advances will go up to 5.7-5.8 percent.

PTI



First Published: Wednesday, March 20, 2013, 21:04


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