Need Credit Growth To Sustain Economic Revival After Q3, Says TRUST MF's Mihir Vora
He said the consumption recovery seen after the income tax and GST rate cuts has been patchy and needs to be sustained beyond the third quarter.
Bank credit growth is necessary to rise if India Inc wants to sustain the revival in demand beyond December, when the immediate jump in consumption after tax cuts tapers off, according to Mihir Vora.
"Markets want to see whether bank credit growth picks up to the extent required. It has been a sore point for a while," Vora, chief investment officer of TRUST Mutual Funds, told NDTV Profit in a televised interview. "If the economy has to grow 6-7% then we need faster credit growth."
He said the consumption recovery seen after the income tax and GST rate cuts has been patchy and needs to be sustained beyond the third quarter. Bank credit growth will fuel private capital expenditure.
The value of loans in India increased 11.4% in the first week of October, over the same month in the previous year, as per Reserve Bank of India data. Credit growth in India averaged 11.75% from 2012 until 2025, reaching an all-time high of 20.8% in December of 2023.
Mihir Vora noted that the retail loan segment has done well as private banks have focused on both secured mortgages and unsecured credit. They have managed this portfolio with good risk controls and granular data.
"It did so well that they de-focused the corporate side. Some private banks are now going aggressively into the MSME space to chase higher yields," he said, highlighting the yield spread with larger corporates.
The fund manager also said bank stocks are "reasonably valued" given their clean balance sheets and lower NPAs. "It is now only about growth and margins."
He also welcomed the central bank's easing of regulations when it comes to allowing higher foreign holdings in public sector banks.
ALSO READ
IDBI Bank Share Price Trades Near Four-Month High After Report Claims Centre To Invite Bids Soon
Watch Mihir Vora's full interview here:
