Bankers expect credit demand to rise in India
Bankers agreed on the need to monitor and regulate fintech industry to ensure customer protection Federation of Indian Chambers of Commerce and Industry
chennai — Indian bankers expect demand for credit to improve in three-six months after demonetisation of 500 and 1,000 rupees’ notes slowed it down, finds a banking survey.
According to the survey, the bankers also want a regulator to govern the financial technology (fintech) industry.
According to the Ficci-IBA BiAnnual Survey of Bankers (JulyDecember 2016), demand for credit slowed down as consumption was affected in the short-term due to cash shortage after demonetisation of 500 and 1,000 rupees’ notes on November 8.
Many respondents to the survey expect credit demand to improve after three-six months, as economic activities are expected to pick up by that time, Federation of Indian Chambers of Commerce and Industry (Ficci) said in a statement. Demonetisation coupled with restrictions on cash withdrawals caused the CASA (current account, savings account) deposits with banks to swell, giving a boost to liquidity while lowering their cost of funds.
As a result, the banks also lowered their marginal cost of funds based lending rates (MCLR) across all tenures. In fact, many banks have lowered the MCLR in December 2016, despite no change in the repo rate by the Reserve Bank of India in its last monetary policy review.
Welcoming the emphasis on digitalisation of banking services as it would reduce their transaction costs, the respondents to the survey called for incentivising the adoption of digital payment modes.
According to the survey, bankers agreed on the need to monitor and regulate fintech industry to ensure customer protection, Ficci said in a statement. “They (banks) believe that an appropriate body needs to be appointed as the regulator for fintech industry. Additionally, there need to be guidelines and regulations set for due diligence, data protection, cyber security and client protection,” Ficci said.