India’s largest private banks are lending faster again but households are not leading the acceleration. Advances grew between 15% and 20% at HDFC Bank, Axis Bank, ICICI Bank and Kotak Mahindra Bank in the June quarter, powered predominantly by corporate, SME and business-banking demand, while retail-loan growth remained uneven at 7%–12%, marking a shift in India’s credit cycle.Companies are borrowing more for working capital, refinancing and liquidity buffers, while unfavourable bond market conditions are redirecting some funding demand towards banks. Retail disbursements are beginning to improve, but the expansion has yet to translate into a broad-based surge in outstanding consumer loans.Equirus Securities said corporate credit was driven by “working capital demand and refinancing rather than a fresh-capex upcycle.” Its review of Q1 bank earnings showed that corporate lending was the biggest swing factor in credit growth, while the retail recovery remained product specific.Also Read | Rs 91,000 crore wipeout: What spooked HDFC Bank, Axis Bank and Kotak investors even as credit growth picked up?Axis Bank’s overall loan book grew 19% year-on-year, led by a 37.5% jump in corporate loans and 25% growth in SME credit. Retail loans, by comparison, increased 8% and were virtually unchanged sequentially.Excluding agriculture, JM Financial estimated Axis Bank’s retail growth at just 5%, with housing, vehicle finance and unsecured portfolios remaining subdued. Corporate loans now account for 34.4% of the bank’s loan book, up from 29.8% a year earlier, while the retail share has declined to 53.5% from 58.8%.However, the forward indicators were more encouraging. Axis Bank’s retail disbursements increased 18% year-on-year, led by home loans at 24%, personal loans at 23% and vehicle finance at 21%. That suggests new business is gaining traction, even if repayments and the existing portfolio mix have kept the outstanding retail book from accelerating meaningfully.HDFC Bank displayed a similar pattern. Advances grew 15.6%, supported by an 18.6% increase in corporate and wholesale loans and 18.7% growth in small and mid-market lending. Business banking loans expanded 22.3%. Retail loans, however, rose only 7.2% year-on-year and 1% sequentially.Anand Rathi Research said HDFC Bank’s credit growth continued to trail Axis Bank and ICICI Bank, with retail remaining soft. It expects the lender’s elevated loan-to-deposit ratio of 95.8% to constrain any marked acceleration until its funding mix improves.Within HDFC Bank’s retail portfolio, mortgages grew 6.8%, auto loans 9.2% and personal loans 10.3%. Gold loans surged nearly 35%, albeit from a relatively small base, while the two-wheeler portfolio contracted.Here too, disbursements were stronger than the outstanding-book numbers. Unsecured personal and business-loan disbursements increased around 20%, mortgage disbursements rose roughly 14% and vehicle lending recorded a recovery. HDFC Bank’s card spending grew about 13%, even as credit-card receivables increased only 2%–3%.Also Read | HDFC Bank shares fall 5% after Q1 results. Should you buy, sell or hold the stock?ICICI Bank was the notable exception, combining corporate momentum with relatively stronger retail growth.Its total loan book expanded 19.6% year-on-year and 5% sequentially. Business-banking loans climbed 28.2%, rural credit 35.4% and domestic corporate loans 18.5%. But retail loans also increased 12% year-on-year and 2.7% sequentially—the strongest quarterly retail growth among the large private banks covered by Nomura.Mortgages rose 14.6% and personal loans 12.9%, while vehicle lending grew 6.2%. The credit-card book declined 1.9% year-on-year and 1.7% sequentially as the proportion of customers revolving balances remained low.Nomura said ICICI Bank’s loan mix was the key differentiator in a quarter when sector-wide growth was driven primarily by corporate and SME borrowers. It highlighted ICICI Bank’s 2.7% sequential retail growth against just 0%–1% at peers.Kotak Mahindra Bank’s total advances increased 15.2%, with its corporate portfolio growing about 15.5% under Equirus’ standardised classification. Business banking, SME lending and short-term credit substitutes were the main growth drivers.Kotak’s retail book expanded 12.3% year-on-year but only 0.7% sequentially. Mortgage loans grew 14.7%, while the combined personal-loan, business-loan and consumer-durable portfolio increased 5%. Management said organic personal-loan growth was running in double digits after excluding the rundown of an acquired portfolio.Credit card balances fell 1.1% year-on-year but rose 4% sequentially. Card spending also increased 4% from the previous quarter. The bank continued to exercise caution in unsecured business loans because of challenges in the SME operating environment, while consumer-durable financing remained a non-focus business.The spending and lending indicators consequently offer a mixed signal. Higher card spending at HDFC Bank and Kotak and improving disbursements at Axis Bank and HDFC Bank suggest that retail activity is stirring. But outstanding retail books remain relatively subdued, and the reports do not establish a broad consumer borrowing boom.The corporate revival also falls short of signalling an unambiguous private capital expenditure surge. ICICI Bank attributed corporate growth to higher working capital utilisation, funding moving from bonds to banks, increased borrowing by non-bank lenders and companies maintaining additional liquidity amid uncertainty. Kotak benefited partly from short-term commercial-paper and credit-substitute opportunities, while HDFC Bank remained selective in intensely competitive large-corporate lending.Funding is the other constraint. Deposit growth reached 18.2% at Axis Bank, 14.7% at HDFC Bank, 14% at ICICI Bank and 11.7% at Kotak. But term deposits grew faster than low-cost current and savings accounts at each lender.CASA ratios declined sequentially by 180–300 basis points across the four banks. HDFC Bank’s ratio fell to 32.3%, Axis Bank’s to 38%, ICICI Bank’s to 39.5% and Kotak’s to 40.3%. Average deposit and CASA balances were healthier than the period-end figures, indicating that part of the decline was seasonal, but the incremental funding mix remained tilted towards costlier term deposits.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)