Today, the Reserve Bank released the results of 19th 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, terms and conditions of loans) for major economic sectors². The latest round of the survey collected senior loan officers’ assessment of credit parameters for Q4:2021-22 and expectations for Q1:2022-23. 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 Q4:2021-22

• Bankers assessed improvement in loan demand from all major sectors and their appraisal stood fairly close to the level of optimism expressed in the previous survey round (Chart 1 and Table 1).

• Terms & conditions of loans are perceived to have generally eased with further loosening especially for agriculture, manufacturing and infrastructure loan categories (Table 2).

B. Expectations for Q1:2022-23

• Bankers were very positive on loan demand from all major sectors during Q1:2022-23 though the level of optimism was somewhat lower than the previous survey round.

• Continued easy terms and conditions of loans are expected during Q1:2022-23.

C. Expectations for Q2:2022-23 and Q3:2022-23

• Loan demand from the major categories of borrowers is expected to improve sequentially till Q3:2022-23 (Table 3).

• Bankers anticipate easier terms and conditions of loans in the second and third quarter of 2022-23.

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

¹ The results of 18th round of the BLS with reference period as October-December 2021 were released on the RBI website on February 10, 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).