Banking Sector Update - Concurrent Indicators Imply Margin Contraction For Private Banks: Systematix
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Systematix Research Report
It is apparent from April 2021 marginal cost of funds based lending rate data that private banks have taken a conservative stance in the wake of the second Covid-19 wave.
There has been a drop in lending rates (fresh loans and outstanding loans).
However, public sector banks data points reflect otherwise.
Credit volume data points reveal stagnant credit card receivable outstanding (at Rs 1.1 trillion) for a couple of months.
Jewelry/gold loan book witnessed strong traction.
Private banks’ dominant position in the credit card segment and public sector banks’ inclination in jewelry/gold loans explains the variation in weighted average lending rate trajectories.
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