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Wednesday, July 28, 2021

Deepak Parekh: Credit growth key laggard, economy to mirror FY21 trend

As on June 18, bank credit growth stood at 5.8 per cent year-on-year, according to RBI data.

By: ENS Economic Bureau | Mumbai |
Updated: July 21, 2021 12:42:34 am
Deepak Parekh, Deepak Parekh HDFC, HDFC Chairman Deepak ParekhDeepak Parekh, Chairman of Housing Development Finance Corporation, at the FE CFO Awards ceremony held on 29.03.2019. (Express Archive photo)

HDFC chairman Deepak Parekh on Tuesday said the country’s macroeconomic fundamentals are strong and recovery is underway, but weak credit growth remains the key laggard. “The key laggard remains overall credit growth which continues to remain tepid,” he said.

As on June 18, bank credit growth stood at 5.8 per cent year-on-year, according to RBI data.

“With the e-commerce boom, demand for real estate is coming from warehousing and fulfilment centres,” Parekh said. Even in terms of commercial real estate, most companies have not given up their office premises, he said while addressing HDFC’s annual general meeting.

Similarly, with the build-up of digital infrastructure, demand for data centres have increased, he noted. “These are segments of the real estate sector that have potential to grow immensely.”

“Owing to the second wave, the Indian economy is likely to mirror a similar trend seen in FY21, where the first half of the financial year is weaker and the second half is significantly stronger.

“In terms of the overall macro-economic environment, the key challenge remains the unpredictability of virus. The world is still susceptible to recurring waves of infections. thus, economic recovery will remain uneven and patchy,” the HDFC chairman said.

According to Parekh, the government has taken several reforms and measures to alleviate Covid-19 related stress. “The government has widened the scope of the Emergency Credit Line Guarantee Scheme to support individuals and businesses impacted by Covid-19. The scheme helps to channel credit to where it is needed the most.”

He said Covid has reaffirmed that there can be no greater security in life than a home. “The inherent demand for home loans continues to remain strong.”

Against the backdrop of the Covid pandemic, the HDFC chairman articulated that there are three key monitorables — liquidity, growth and asset quality.

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