Today, the Reserve Bank released the results of 21st round of its quarterly Bank Lending Survey (BLS)¹, which captures qualitative assessment and expectations of major scheduled commercial banks (SCBs) on credit parameters (viz., loan demand and terms & conditions of loans) for major economic sectors². The latest round of the survey collected senior loan officers’ assessment of credit parameters for Q2:2022-23 and expectations for Q3:2022-23. Owing to uncertainty driven by the COVID-19 pandemic, an additional block was included in this survey round for assessing outlook for two quarters ahead as well as three quarters ahead.

Highlights:

A. Assessment for Q2:2022-23

• Bankers assessed improvement in loan demand on a sequential basis across all major sectors (Chart 1 and Table 1).

• Respondents reported easy loan terms & conditions albeit with some lowering of pace for agriculture, mining, and infrastructure loans (Table 2).

B. Expectations for Q3:2022-23

• Bankers expect loan demand to improve further across all major sectors during Q3:2022.

• Loan terms & conditions are expected to ease further during Q3:2022-23.

C. Expectations for Q4:2022-23 and Q1:2023-24

• Bankers remain upbeat on loan demand during January-June 2024 across the major categories of borrowers (Table 3).

• Easier loan terms & conditions are anticipated in Q4:2022-23 and Q1: 2023-24.

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

¹ The results of 20th round of the BLS with reference period as April-June 2022 were released on the RBI website on August 05, 2022. The survey results reflect the views of the respondents, which are not necessarily shared by the Reserve Bank.

² The survey questionnaire is canvassed among major 30 SCBs, which together account for over 90 per cent of credit by SCBs in India.

³ 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).