Today, the Reserve Bank released results of 16th round of its quarterly bank lending survey (BLS)¹. This forward-looking survey is being conducted since Q2:2017-18 to capture the qualitative assessment and expectations of major scheduled commercial banks (SCBs) on credit parameters (viz., loan demand, terms and conditions of loans) for major economic sectors². The latest round of the survey, conducted during Q1:2021-22, collected senior loan officers’ assessment of credit parameters for Q1:2021-22 and expectations for Q2:2021-22³. Owing to uncertainty driven by the COVID-19 pandemic, an additional block was included in this round of the survey for assessing outlook for two quarters as well as three quarters ahead.

Highlights:

A. Assessment for Q1:2021-22

• After recording sequential rise since Q2:2020-21, loan demand slumped during Q1:2021-22 when major disruption in economic activities was witnessed in the wake of the second wave of the pandemic; the impact was reported across all major sectors (Chart 1 and Table 1).

• Banks indicated some restrain in easing of the terms and conditions of loans during Q1:2021-22 (Table 2).

B. Expectations for Q2:2021-22

• Demand for loans is expected to rise during Q2:2021-22; bankers display maximum optimism on demand for retail/personal loans followed by that for manufacturing and services sector.

• Outlook on terms and conditions of loans for Q2:2021-22 portrayed some easing, especially for the agriculture and manufacturing sectors.

C. Expectations for Q3:2021-22 and Q4:2021-22

• Sentiments on overall loan demand are upbeat across all sectors in the second half of 2021-22 (Table 3).

• In upcoming quarters, banks anticipate sequential easing of loan term and conditions across major sectors.

Note: Please see the excel file for time series data.

¹ The results of 15th round of the BLS with reference period as January-March 2021 were released on the RBI website on April 7, 2021.

² The survey questionnaire is canvassed among major 30 SCBs accounting for more than 90 per cent of credit by SCBs in India.

³ The survey results reflect the views of the respondents, which are not necessarily shared by the Reserve Bank of India.

⁴ Net Response (NR) is computed as the difference of percentage of banks reporting increase/optimism and those reporting decrease/pessimism in respective parameter. The weights of +1.0, 0.5, 0, -0.5 and -1.0 are assigned for computing NR from aggregate per cent responses on 5-point scale i.e. substantial increase/ considerable easing, moderate increase/ somewhat easing, no change, moderate decrease/ somewhat tightening, substantial decrease/ considerable tightening for loan demand/loan terms and conditions parameters respectively. NR ranges between -100 to 100. Any value greater than zero indicates expansion/optimism and any value less than zero indicates contraction/pessimism. Increase in loan demand is considered optimism (Tables 1), while for loan terms and conditions, a positive value of net response indicates easy terms and conditions (Table 2).