Today, the Reserve Bank released the results of 26th 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 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 2024-25³.

Highlights:

A. 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).

B. 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).

C. 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.

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

¹ The results of 25th 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).