ICICI Bank, the key driver of the retail lending boom that began about four years ago, has finally seen a moderation in growth in consumer credit. The increase in retail credit disbursements made by the bank in 2006-07 would be half the expansion in each of the last five years.
"The growth in (retail loan) disbursements would slow to 20 per cent in 2006-07 from 40 per cent experienced over five years," said V Vaidyanathan, executive director, ICICI Bank.
ICICI Bank disbursed retail credit of Rs 62,069 crore (Rs 620.69billion) in 2005-06. Going by projections, the bank would have disbursed nearly Rs 74,500 crore (Rs 745 billion) as the year closes at the end of this month.
Analysts said this is a sign of the overall credit growth in the banking industry moderating closer to the Reserve Bank of India's 20 per cent target.
The RBI has been tightening the monetary policy since September 2004, raising both reverse repo and repo rates by 150 basis points to 6 per cent and 7.50 per cent, respectively, and the cash reserve ratio by 150 basis points to 6 per cent.
The reverse repo rate is the rate at which the RBI withdraws liquidity from the system by issuing bonds. The repo rate is the short-term lending rate for