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Date : Feb 05, 2021
Bank Lending Survey for Q3:2020-21

Today, the Reserve Bank released results of 14th 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 sectors. The survey questionnaire is canvassed among major 30 SCBs accounting for more than 90 per cent of bank credit in India. The latest round of the survey, conducted during Q3:2020-21, collected senior loan officers’ assessment of credit parameters for Q3:2020-21 and expectations for Q4:2020-212. 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 ahead as well as three quarters ahead.

Highlights:

A. Assessment for Q3:2020-21

  • Loan demand conditions revived further during Q3:2020-21, as reflected in increased level of optimism for all major sectors (Chart 1 and Table 1).

  • Banks assessed easing of terms and conditions of loans to all sectors barring the infrastructure sector (Table 2).

B. Expectations for Q4:2020-21

  • Bankers expect further improvement in loan demand in Q4:2020-21; higher optimism is reported especially for manufacturing, infrastructure, services and personal loan sectors.

  • Going forward, banks expect to continue with easy loan terms and conditions, with further softening expected for personal loan segment.

C. Expectations for Q1:2021-22 and Q2:2021-22

  • Banks expect further sequential improvement in loan demand conditions across all sectors till Q2:2021-22 (Table 3).

  • Easy loan term and conditions are expected to continue in the first half of 2021-22.

CH1

Table 1: Sector-wise Loan Demand - Summary of Net responses3
(per cent)
Sectors Assessment Period Expectations Period
Q2:2020-21 Q3:2020-21 Q3:2020-21 Q4:2020-21
All Sectors 10.9 33.9 32.6 44.6
Agriculture 31.3 35.0 39.6 33.3
Mining and Quarrying Sector 2.1 16.1 18.8 19.6
Manufacturing 12.5 31.0 39.6 46.6
Infrastructure 0.0 19.6 22.9 30.4
Services 21.7 31.0 28.3 41.4
Retail/Personal 25.0 45.8 30.0 47.9

Table 2: Sector-wise Loan Terms and Conditions - Summary of Net responses
(per cent)
Sectors Assessment Period Expectations Period
Q2:2020-21 Q3:2020-21 Q3:2020-21 Q4:2020-21
All Sectors 0.0 14.3 17.4 21.4
Agriculture 19.6 15.5 19.6 17.2
Mining and Quarrying Sector 4.3 3.6 17.4 14.3
Manufacturing 12.0 10.0 20.0 13.3
Infrastructure 0.0 -3.4 10.9 5.2
Services 14.6 15.5 18.8 17.2
Retail/Personal 15.0 24.0 17.5 26.0

Table 3: Sector-wise Expectations for extended period - Summary of Net responses
(per cent)
Sectors Loan Demand Loan Terms and Conditions
Q1:2021-22 Q2:2021-22 Q1:2021-22 Q2:2021-22
All Sectors 53.6 57.1 22.4 31.0
Agriculture 37.9 41.4 19.0 24.1
Mining and Quarrying Sector 19.6 25.0 7.1 14.3
Manufacturing 51.7 55.2 17.2 27.6
Infrastructure 41.1 48.2 12.5 19.6
Services 55.4 60.7 19.6 26.8
Retail/Personal 50.0 63.8 22.4 29.3

Note: Please see the excel file for time series data

1 The background and methodological aspects of the survey are documented in the article ‘Bank Lending Survey - Recent Trends’ published in December 2020 issue of the RBI Bulletin (weblink: https://www.rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=19963).

2 The survey results reflect the views of the respondents, which are not necessarily shared by the Reserve Bank of 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). Percentage share of responses may not add up to 100 due to rounding off.

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