As sluggish economy hits retail sector, banks face increasing loan stress
Image: Adnan Abidi / Reuters
The economic slowdown is starting to reveal its real impact. Banks, which in recent years had turned their focus from the plagued corporate banking space to retail lending, are now witnessing stress in this segment too.
A recent report by brokerage Motilal Oswal says that retail loans now account for 28 percent of all credit, up from 25 percent in FY18. This increase has come at the cost of loans to industry, which have fallen from 35 percent to 32 percent in the same period. For most private banks, the proportion of retail banking has increased: For Kotak Mahindra Bank (KMB) it is 47 percent on a consolidated basis, for Axis Bank it is 53 percent, and for HDFC Bank it is around 48 percent.
(This story appears in the 14 February, 2020 issue of Forbes India. To visit our Archives, click here.)