No festive cheer for banks this year

season this year has failed to bring in good news for the banks. Bankers believe that the reluctance of the consumer to buy has resulted in this festival season being worse than even the last two years when the lenders witnessed a tepid demand.

Jairam Sridharan, Head, consumer lending and payments atAxis Bank says that this festival season for the banking sector has been one of the "worst Stock Market Trading Tips

"Demand in this season has been really muted. We have seen enquiries come in for home, cars etc but these enquiries are not converting yet. In fact, car sales are down in the month of October when you had both Dhanteras and Diwali in the same month, something that is very unusual. Similarly, inventories for home have also shot up across the country."

Car sales dipped by 2.55% in October as the festival season demand for auto remained in slow lane. According to the data released by Society of Indian Automobile Manufacturers (SIAM), domestic car sales in October this year stood at 1,59,036 units as compared to 1,63,199 units in the same month of 2013 Intraday Trading Tips

Even inventory in the real estate market has shot up and continues to rise despite the slew of offers launched by builders and banks. As per a survey by property consultancy firm, Liases Foras, inventory in the Mumbai Metropolitan Region has already shot up to 50 months and in the NCR it has touched a whooping 83 months.

Other bankers also agree that this festival season the growth has been lower than the last two years.

"Credit off take has been poor and we have not seen any significant demand in this festival season. The growth this year has been lower than last year across the industry in the retail segment," said A Surendran, Head-Retail Banking, Federal Bank Financial Astrology Trading Tips

At the start of the festival season bankers were hopeful that this time around, the credit growth would be better than the last year. However, they agree that even though September was a better month demand has nosedived in October.

Ram Sangapure, Executive Director, Punjab National Bank said that the credit growth in the industry during the festival season was approximately 25% but this year pick up has not happened. "This year growth is much, much lower than the 25%. It will be in double digits but significantly lower."

In the past one year credit growth was up by 11.17%, in the period ended October 17, bank credit was recorded at Rs 62, 72,621 crore up from Rs 56, 41, 910 crore a year ago, according to Reserve Bank of India data Commodity Trading Tips

Pralay Mondal, senior group president (retail and business banking)-YES Bank said that even though there are lots of positive sentiments, structural changes are yet to take place. He explained that interest rates continue to remain high and despite the build up in inventory in segments such as housing prices have not corrected. As a result consumers continue to be on a wait and watch mode and are postponing their buying decision.

Bankers believe that this is more worrisome as corporate demand continues to remain sluggish and it is the growth in the retail segment that had lead credit growth for the banks.

"Corporate demand has been rather muted for the past few quarters and is expected to be so in the next couple of quarters. But now growth from the retail segment has also been slack and if it continues to be so at a time when even corporate off take is low then the next few quarters can be a cause of concern," said Sridharan of Axis Bank Nifty Trading Tips