While most bankers see advances growing 16-18 per cent this financial year, they expect credit expansion to slow to less than 16 per cent in 2012-13.
Banks' credit growth has remained over 16 per cent since 2005-06. In the previous financial year, loan growth was 21.38 per cent.
According to bankers, credit growth this financial year is driven by disbursement of loans sanctioned earlier.
With new project launches being delayed, the pipeline for new sanctions is drying up quickly.
On the retail side, high rates and rising inflation are keeping borrowers in a wait-and-watch mode and delaying their purchase decisions.
The festive season did little to boost sentiments and improve retail loan demand.
"A lot depends on the investment climate. Going by the current trend, we expect credit growth at around 16-18 per cent this year. Next year, it would certainly be lower than this," said M V Nair, chairman and managing director, Union Bank of India.
A chief executive of a Mumbai-based private bank said if loan sanctioning did not improve immediately, banks would stare at credit growth of 14
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