Indian Banks Target Consumer Loans To Counter Slowdown


BANGALORE:   The Indian Economy has picked up, but one aspect continues to stall: Corporate lending.  This has greatly affected banks, which are now beginning to use other strategies. They are increasingly getting into the business of credit cards and personal loans, and are using blanket advertising, cold call campaigns and even sending employees to local malls to lure customers.

Lending to companies, rather than a large number of consumers has traditionally been the mainstay for banks in Asia's third-largest economy. But as India pulls itself out of two years of slower economic growth, those loans are giving slow returns, large investment projects have stalled and the company profits are lacklustre.

The current push is the boldest since before the 2008 financial crisis, with some lenders aiming to increase loan books by a third or more each year. They are counting on Indians' growing appetite for luxuries like holidays abroad.

And it is easy to see why, given the high margins and huge growth potential forecast for India.  "For the industry as a whole, since a couple of years ago we've seen a slowdown in corporate (lending). So there is a genuine push towards the consumer lending space," said Sumit Bali, a senior executive vice president at Kotak Mahindra Bank Ltd.

While home loans still to make up about half of consumer loans, Bali said there was an "increasing appetite" for credit cards and unsecured lending, with Kotak trying for up to 35 per cent and 45 per cent growth, respectively.

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