India’s private banks hold on to loan growth target

MUMBAI, Jan 25 (Reuters): Indian private banks expect growth in loans to sustain in the "high teens" over the next fiscal year despite a struggle to raise deposits and tougher capital requirements imposed by the central bank.

In November, the Reserve Bank of India (RBI) raised the capital requirements for personal loans, credit cards and for lending to non-banking finance companies (NBFCs) but banks have chosen to absorb the higher capital requirements rather than slow loan growth.

While Kotak Mahindra Bank said its loan book would grow in the "high teens" next year, IndusInd Bank expects credit growth of 18-20 per cent for this fiscal year and the next.

RBL Bank expects a 20 per cent growth in the next two years. HDFC Bank and ICICI Bank, two of India's biggest private banks, have not publicly forecast loan growth guidance for the next year.

Credit growth will be led by vehicle finance, consumer finance and microfinance businesses among others, said Sumant Kathpalia, chief executive officer of IndusInd Bank.

Indian banks' credit has grown between 15-16 per cent over the past 12 months, excluding the impact of a merger between HDFC Bank and its parent HDFC Ltd, with unsecured loans and credit cards showing the sharpest expansion.