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Will Rising Rates Hurt Bank’s Credit Growth? Nirmal Bang’s Thematic View

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

We anticipate the bank credit growth in FY23 to be ~15%, in line with the nominal gross domestic product growth. In fact, our proprietary credit growth model estimates a higher credit growth of ~19% for FY23. But, our model has underestimated and overestimated credit growth during the pandemic period due to Covid-19 related measures announced by the Government, such as the emergency credit line guarantee scheme, and elevated inflationary pressures.

For sure, credit growth has deviated from nominal GDP growth in FY21 and FY22 too. However, we expect it to be broadly in line with nominal GDP growth in FY23.

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This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

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