April is not usually the best month for banks as demand for loan picks momentum only after the festival season starts. But the lockdown that started from March 25 has severely impacted banks' outstanding loan book in select sectors.
The latest data from the Reserve Bank of India for 29 days between March 27 and April 24 shows a de-growth in the loan book of banks.
This is despite the borrowers opting for loan moratorium, which ideally increases the outstanding loan book because the deferred interest and principal get added to the loan amount.
Take, for instance, the credit card segment within retail, which was growing at a very high rate in the past, has seen a 10 per cent fall in the outstanding loan amount. The credit card loan book stood at Rs 96,978 crore as on April 24, 2020.
Similarly, the personal loan segment saw a fall of 3.7 per cent from Rs 7,26,11 crore to Rs 6,99,259 crore. These are the two segments where the banks would be very cautious in future because of the fall in growth, job losses and stagnant income levels.
The loan to micro and small enterprises also fell by 6-8 per cent during the 29 days lockdown period. There is a likelihood of MSME loan book growing in 2020-21 because of the Rs 3 lakh crore guarantee cover offered by the government to banks. But there is also a possibility of higher delinquencies in this segment.
The medium enterprises too saw a fall from Rs 1,05,598 crore to Rs 99,458 crore.
The nationwide lockdown, which started from March 25, had completely shut the lending operations in banks with only credit card facility or pre-approved personal loans available to customers to avail. The rest of the banking operations, especially project appraisal, got impacted for fresh loans.
Some suggest that the impact of six-month moratorium will get reflected in the outstanding loan book soon as the April was the period when people were in the process of taking a decision whether to go for a moratorium or not.
Meanwhile, banks have announced that their 25-30 per cent loan book is under moratorium. "So if one takes a six-month deferment of interest of around 8-10 per cent, the outstanding loan book should increase by 1.5-2 per cent in 2020-21," says a banker.