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Credit growth is picking up momentum and could exceed 15% this year, making it the strongest in the last three years, said Adhil Shetty, co-founder and CEO of BankBazaar, on the sidelines of the 6th PICUP Fintech Conference and Awards organised by FICCI.
Citing December numbers that showed growth at 15-16%, about 5 percentage points higher than last year, Shetty said the uptrend is likely to continue as banks leverage better data and AI to improve systems and customer engagement. "I definitely see now with AI coming in with better data, usage of systems, that we will see something north of 15%," he said. Shetty noted that while consumers remain savvy and continue to channel large sums into SIPs and mutual funds, the recent market correction has renewed interest in fixed deposits. Banks are responding by innovating with products designed to retain savings, including savings accounts with repo-linked interest rates and flexible FDs with lower breakage fees. "I think the banking system is innovating and it will figure how to keep the deposit growth to match the credit growth," he said. On the retail unsecured lending front, Shetty said the sector has undergone a "big cleanup" over the last two to three years, with lenders refining risk assessment and curbing multiple small-ticket personal loans of Rs 10,000-12,000. The learning process, driven in part by RBI's focus, has improved portfolio quality. "What we're seeing with the new business that's happening is the quality is much higher... we're in a good place in unsecured," he said, adding that the portfolio is now in a better shape than it has been in the last three years. Net interest margins, which have been under stress, are also expected to improve as the repo rate pauses. With spreads widening, Shetty expects the banking sector to see a year of growing profitability and credit expansion. A major shift underway is the adoption of live, AI-driven intelligence for real-time risk monitoring. Banks are now using anonymised transaction data to assess a consumer's ability to manage loans and to flag potential stress early. "A lot more use of AI for risk monitoring is coming into the banking system," Shetty said. While BankBazaar's business is India-focused and not directly impacted by global events, Shetty acknowledged that consumer sentiment, credit card spending and overall consumption remain sensitive to geopolitical developments. He expressed hope that the worst of the West Asia conflict is behind and that a quick resolution between Iran and the U.S. would support stability. On deposits, Shetty said the trend of money moving to mutual funds and stock trading has been persistent over the last three-four years, but the recent volatility has reminded investors, especially seniors, of the value of stability. Banks are now countering this with innovative FD products to compete for savings. (ANI)
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