Note Ban Lends a Hand to Consumer Lending
Saloni Shukla, Shilpy Sinha & Writankar Mukherjee
Mumbai | Kolkata: Consumer lending was the surprise beneficiary of the November 8 currency swap as Indians borrowed more to spend on highvalue items and travel, upending conventional financial wisdom that only basic needs and staples make up the typical shopping list during periods of economic stress. Central bank data at the end of November showed demand for white goods — such as refrigerators, automatic washing machines — drove credit expansion in India. Consumer-durables loans at banks increased 18.2% and personal loans 15.2% in the month while total non-food credit rose 4.8%.
“Demonetisation has played out differently for different segments,” said Rajiv Jain, MD, Bajaj Finance. “It was a highly volatile quarter. Originally, our expectation was it would be much worse. Our consumer balance sheet was up 47% in the quarter.” The Centre on November 8 decided to demonetise currencies of .₹ 500 and .₹ 1,000 denominations to help combat counterfeiting and root out the source of parallel economy. The government sought to replace about 85% of the total currency circulation by value at one go.
RBI data at the end of November showed that demand for white goods drove credit expansion