The upcoming festive season-and the sharp cuts in both producer and personal taxes-have provided banks the opportunity to finance burgeoning consumer demand and reverse the hitherto slow loan growth through disbursals to the traditionally high-margin retail credit lines.
Large consumer-facing banks, such as HDFC Bank, ICICI Bank, State Bank of India (SBI), Axis Bank and Bank of Baroda (BoB), have either launched festive offers early or are timing them with the goods and services tax (GST) cut to boost retail exposure after a brief lull.
"Festivals in India bring a surge in spending, with customers seeking value across shopping, travel, and more," said Arnika Dixit president & head-cards, payments & wealth management, Axis Bank. "To enhance their festive experience, Axis Bank has partnered with leading brands to offer a curated bouquet of deals and discounts on credit cards, along with easy EMIs on big-ticket purchases like electronics and travel."
Bank credit growth at 10% is lower than the 14% growth recorded a year earlier, Reserve Bank of India (RBI) data showed. In this backdrop, retail loans that yield fatter margins are seen as a way of both expanding banking assets with less risk and cushioning earnings against margin shrinkage generally witnessed during periods of rapid reductions in policy rates.
The RBI's sectoral credit data showed that major loan components are growing slower than last year. Personal loans are expanding at 15%, slower than 17% recorded last year, as key segments like 'other personal loans', 'vehicle loans' and 'credit card outstanding' have slowed.
Festive Cheer
But the festive season is expected to alter that script. Last week, HDFC Bank launched its annual 'Festive Treats' offers to catch festivities of Onam and Ganesh Chaturthi partnering with brands across apparel, electronics, dining, travel and jewellery among other things.
ICICI Bank is likely to launch its own 'Festive Bonanza' offers later this week while Axis Bank will launch special discounts and cash back offers to coincide with the GST cuts effective September 22, spokespersons for these banks confirmed.
Bankers and analysts say this festive season is crucial for revival of credit demand as sustained spending by consumers could lead to momentum in credit growth for the remaining part of the fiscal.
Loans to agriculture and allied activities grew 7% year on year sharply down from 17% a year ago while credit growth to industry is down to 6% from 8% a year ago.
Sanjay Agarwal, senior director, Care Ratings said slower credit growth so far this fiscal means the upcoming festive season becomes crucial.
In the calendar year 2025, growth in mortgages have slowed to around 10% year-on-year, down from 18% previously. Loan growth will pick up if mortgage growth improves.
Large consumer-facing banks, such as HDFC Bank, ICICI Bank, State Bank of India (SBI), Axis Bank and Bank of Baroda (BoB), have either launched festive offers early or are timing them with the goods and services tax (GST) cut to boost retail exposure after a brief lull.
"Festivals in India bring a surge in spending, with customers seeking value across shopping, travel, and more," said Arnika Dixit president & head-cards, payments & wealth management, Axis Bank. "To enhance their festive experience, Axis Bank has partnered with leading brands to offer a curated bouquet of deals and discounts on credit cards, along with easy EMIs on big-ticket purchases like electronics and travel."
Bank credit growth at 10% is lower than the 14% growth recorded a year earlier, Reserve Bank of India (RBI) data showed. In this backdrop, retail loans that yield fatter margins are seen as a way of both expanding banking assets with less risk and cushioning earnings against margin shrinkage generally witnessed during periods of rapid reductions in policy rates.
The RBI's sectoral credit data showed that major loan components are growing slower than last year. Personal loans are expanding at 15%, slower than 17% recorded last year, as key segments like 'other personal loans', 'vehicle loans' and 'credit card outstanding' have slowed.
Festive Cheer
But the festive season is expected to alter that script. Last week, HDFC Bank launched its annual 'Festive Treats' offers to catch festivities of Onam and Ganesh Chaturthi partnering with brands across apparel, electronics, dining, travel and jewellery among other things.
ICICI Bank is likely to launch its own 'Festive Bonanza' offers later this week while Axis Bank will launch special discounts and cash back offers to coincide with the GST cuts effective September 22, spokespersons for these banks confirmed.
Bankers and analysts say this festive season is crucial for revival of credit demand as sustained spending by consumers could lead to momentum in credit growth for the remaining part of the fiscal.
Loans to agriculture and allied activities grew 7% year on year sharply down from 17% a year ago while credit growth to industry is down to 6% from 8% a year ago.
Sanjay Agarwal, senior director, Care Ratings said slower credit growth so far this fiscal means the upcoming festive season becomes crucial.
In the calendar year 2025, growth in mortgages have slowed to around 10% year-on-year, down from 18% previously. Loan growth will pick up if mortgage growth improves.
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