Credit demand from consumers seemed to be back on track, especially in sectors such as auto and home loans though banks had cut down unsecured loan exposures, said KV Kamath, chairman of ICICI Bank.
"So far as mortgages are concerned, I think they are back from where they were a year ago. The tension between buyer, builder, and the lender is now more or less off. Auto sector financing is also back," Kamath said at the sidelines of a banking seminar.
The chairman of the country's largest private sector bank felt 80 per cent of the consumer loans were back, the remaining 20 per cent mostly unsecured loans had taken a back seat.
"Unsecured consumer credit is certainly hit. Banks are not lending unsecured loans," he said. "We at ICICI Bank have significantly slowed down unsecured loans since one year. We only give unsecured loans to few existing clients, which have deposits and a good track record with us," he said while adding that ICICI Bank took the lead in slowing down unsecured loans.
Though home loans have picked up, commercial real estate loan demand is still slack due to excess capacity creation.
The growth of retail credit demand was not reflected in the overall credit growth numbers as a slowdown in working capital demand dragged down the overall numbers, felt Kamath.
"It's not reflected in the numbers because lack of working capital. This loan is distorting the numbers. If we keep the working capital loan aside, lending rate will be healthy by the end of the year," he said while adding that credit growth for 2009-10 was likely to be 29 per cent except the working capital loan.
Credit growth during April 1 to August 14 was only 1 per cent compared with 3.3 per cent a year ago.
Also, the projects, which were in a conception stage a few months back, were being implemented now, he said.
Kamath saw interest rates remaining stable going ahead.
"To me, I do not fear interest rates to go up immediately. What the Reserve Bank of India will do if inflation rears up, we think we have to wait for one month for the monetary policy. It may react based on the what is the type of inflation and whether monetary policy action will help or not," he said.
