Bank Lending Survey for Q3:2023-24

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Published on February 08, 2024

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Bank Lending Survey for Q3:2023-24

Today, the Reserve Bank released the results of 26^th round of its quarterly Bank Lending Survey^{^[1]}, 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 sectors^{^[2]}. The latest round of the survey, which was conducted during Q3:2023-24, collected senior loan officers’ assessment of credit parameters for Q3:2023-24 and their expectations for Q4 of 2023-24 and Q1 and Q2 of 2024-25^{^[3]}.

Highlights:

Assessment for Q3:2023-24

Bankers reported sustained improvement in loan demand from major sectors during Q3:2023-24 (Chart 1 and Table 1).
At the aggregate level, most of the respondents reported stable terms and conditions for loan to major sectors during Q3:2023-24 though they assessed tightening of the terms for retail/personal loans (Table 2).

Expectations for Q4:2023-24

Bankers expect further improvement in loan demand conditions during January-March 2024 (Table 1).
Optimism for retail/personal loans remained very high, though it was marginally lower when compared to the previous survey round; agriculture, manufacturing, infrastructure and services sectors are also expected to support the robust loan demand at the aggregate level.
Overall, the terms and conditions of loans are expected to remain easy; sustained high optimism for retail/personal loan demand has moderated in the latest survey round but it remains comparable to other major sectors; on the other hand, optimism on the mining sector is relatively lower (Table 2).

Expectations for Q1:2024-25 and Q2:2024-25

Bankers continue to remain highly positive on loan demand from major sectors during H1:2024-25; optimism on the mining sector, however, remains lower vis-a-vis other major sectors.

Table 1: Sector-wise Loan Demand - Net response^{^[4]}

(per cent)
Sectors	Assessment Period		Expectations Period
Sectors	Q2:2023-24	Q3:2023-24	Q3:2023-24	Q4:2023-24
All Sectors	44.2	44.6	44.2	48.2
Agriculture	29.3	26.7	31.0	31.7
Mining and Quarrying Sector	0.0	13.8	13.0	17.2
Manufacturing	41.4	41.7	39.7	41.7
Infrastructure	29.3	33.3	39.7	35.0
Services	46.2	42.9	44.2	37.5
Retail/Personal	47.8	48.0	54.3	52.0

Table 2: Sector-wise Loan Terms and Conditions - Net response

(per cent)
Sectors	Assessment Period		Expectations Period
Sectors	Q2:2023-24	Q3:23-24	Q3:2023-24	Q4:2023-24
All Sectors	13.5	16.1	15.4	19.6
Agriculture	15.5	13.3	17.2	18.3
Mining and Quarrying Sector	5.8	-1.7	7.7	5.2
Manufacturing	15.5	17.2	17.2	20.7
Infrastructure	12.5	11.7	12.5	11.7
Services	15.4	14.3	15.4	17.9
Retail/Personal	23.9	20.0	28.3	18.0

Table 3: Sector-wise Expectations for Extended Period - Net Response

(per cent)
Sectors	Loan Demand		Loan Terms and Conditions
Sectors	Q1:2024-25	Q2:2024-25	Q1:2024-25	Q2:2024-25
All Sectors	41.4	43.1	17.9	17.9
Agriculture	31.7	36.7	19.0	19.0
Mining and Quarrying Sector	8.6	13.8	3.6	1.8
Manufacturing	31.7	31.7	17.2	17.2
Infrastructure	31.7	31.0	15.5	15.5
Services	43.1	39.7	16.1	17.9
Retail/Personal	25.9	36.2	20.7	17.2

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

[1] The results of 25^th round of the BLS with reference period as July-September 2023 were released on the RBI website on October 6, 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] In this data release, we have used the responses received after the RBI’s announcement on regulatory measures towards consumer credit and bank credit to NBFCs dated November 16, 2023.

[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).