The banks and financial institutions in the country have reported a fall in the growth of their retail loans business. At the end of February 2009, the overall growth in the retail loans fell down to 8.5% against 13.2%, a year ago.

The major fall in the retail portfolio has been attributed to the home loan and credit card segments. Home loan growth dropped down to 7.5% from 12% due to the lack of demand during the period under review. Similarly the credit cards outstanding also fell from 51.3% to 8.8% due to the tightening of norms by the lenders.

The overall business growth in the industry is also low and the expectation survey anticipated a GDP growth rate of 5.7% for the year 2009-10. Further the survey predicted some more moderations in the economic activity.

The retail loan segment that is facing a lack of demand is not expected to see a revival soon as the initiative taken by the PSU banks in December 2008 to offer loans at 10% has not led to any enthusiasm from the borrowers.

In fact the overall credit growth for the year 2008-09 fell down to 17.3% against the RBI's target of 24%. The central bank had targeted the overall loan growth of 24% on account of lending by PSU banks to the infrastructure sector, oil and steel firms.

Although RBI along with the Government has taken various measures to ease the conditions and increase the flow of funds from the banks but yet there has not been any significant effects in the industry.