Economy Well Past ‘Green Shoots’ Stage, IndusInd Bank’s Romesh Sobti Says

India is no longer just in the “green shoots” stage with macroeconomic growth making a strong comeback, IndusInd Bank’s Chief Executive Officer Romesh Sobti said while announcing December quarter results today.

While other bankers have agreed that there were some signs of growth in the economy, Sobti is the first domestic banker to agree that it is back in a strong way.

The banking system has largely been dependent on retail loans to prop up credit growth. Now corporate loan growth is making a come back, according to IndusInd Bank.

Even with a retail credit growth of 17-18 percent, overall credit growth in the Indian banking system stood at 10.6 percent, Sobti said, adding it was not possible for credit growth to show a strong spurt without corporate credit coming back. Till recently, the banking sector’s credit growth rose by only 5 percent on a year-on-year, Sobti said.

To be sure, the capital expenditure that the system is seeing is coming due to brown field expansion, Sobti clarified. Brown field expansion is when a company spends capital on adding capacities to existing projects. It is different from green field expansion, where companies spend money to start new projects.

Also Read: IndusInd Bank Profit Up 25% In Q3

The main sectors showing demand included power transmission, manufacturing, engineering and other technical segments.

Vehicle financing and especially commercial vehicle financing was another major segment which saw significant growth during the quarter. IndusInd Bank’s commercial vehicle disbursements grew 39 percent on a quarter-on-quarter basis, the bank said. According to the analyst presentation available on the bank’s website, outstanding commercial vehicle loans as on December 31, 2017 were at Rs 17,941 crore, as compared with Rs 16,383 crore as on September 30.

Overall corporate loan book rose 26 percent on a year-on-year basis.