Today, the Reserve Bank released the results of 25th round of its quarterly Bank Lending Survey¹, which captures qualitative assessment and expectations of major scheduled commercial banks on credit parameters (viz., loan demand as well as terms and conditions of loans) for major economic sectors². The latest round of the survey, which was conducted during Q2:2023-24, collected senior loan officers’ assessment of credit parameters for Q2:2023-24 and their expectations for Q3 & Q4 of 2023-24 and Q1 of 2024-25.

Highlights:

A. Assessment for Q2:2023-24

• Bankers assessed better loan demand conditions in Q2:2023-24, driven by improvement in manufacturing, services, and retail/personal loans (Chart 1 and Table 1).

• Respondents assessed broadly similar loan terms and conditions (Table 2).

B. Expectations for Q3:2023-24

• Bankers remained fairly optimistic on overall loan demand during Q3:2023-24; higher demand for loans is expected from mining, infrastructure and personal/retail sectors.

• Existing loan terms and conditions are expected to prevail during Q3:2023-24, with more easing for retail/ personal loans.

C. Expectations for Q4:2023-24 and Q1:2024-25

• Bankers remain upbeat on loan demand during Q4:2023-24 across the major categories of borrowers with some seasonal moderation in Q1:2024-25 (Table 3).

• Marginal easing of loan terms and conditions are expected in Q4:2023-24 and Q1:2024-25.

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

¹ The results of 24th round of the BLS with reference period as April-June 2023 were released on the RBI website on August 10, 2023. 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).