If I could get specific then with Kotak Mahindra Bank and discuss the 6% sequential growth as well that we have seen, credit cards, retail, MFI, SME, etc. Is that kind of growth looking sustainable?The way I see it is that growth has been steady. Some segments you are beginning to see some small slowdown in the home loan segment and this is more geographical than as a secular trend. The secular trend is still showing growth but there are some pockets of slowdown because of the rates have increased so you are seeing some amount of that. The consumption part, let us say consumer durable maybe it is seasonal but you are seeing some amount of a little tapering off. But overall, if you look at the commercial segment whether it is the commercial vehicles, whether it is SME, the demand still continues. So I think even in Q4, you are likely to see reasonable demand but you are seeing some semblance because of the rise in interest rate but it is very small as of now. I expect in the industry, the growth segments across consumer and commercial to continue to grow. And if the government spends that 10 lakhs capex that they have outlined in the budget, I think it will give that fillip, that infrastructure spend will give fillip to the entire industry for credit growth. So, we have to wait and watch data.
And given that the focus is on unsecured retail, is it that as of now you do not see any sort of a risk over here because we just want to understand how comfortable you are with growing loans here and what the rate of loan growth is going to be.Let us just get the perspective right. We were less than 5% on unsecured retail and we closed the last quarter with close to 9% and this was as a percentage of the overall loan book so we are still very small and we have said that we are comfortable going up to mid-teens. So, we have a strategy very clearly laid out. We have the segments that we are focussed on which is credit cards, personal loans, MFI, etc, and so we will stick to strategy as we see. We are also very clear about how we are growing the segment which is data science, data led, customer cohort basis and given the scenario right now we will continue to follow our strategy to say up to the mid-teens as we are comfortable growing this business.
Also one trend in this sector at the moment is that the deposit growth has been lagging with respect to the credit growth though it seems to be catching up. How soon do you think the translation will happen and what kind of deposit growth are you expecting would be sustainable over the next 12 to 18 months?I think the industry has seen deposit growth of anywhere between up to 12% to 15% and the reason is that there has been consumption. If you see what has happened in the post COVID phase, people have been spending. Initially, it started by buying homes, buying durables, buying cars as you know there is a waiting list for cars, the upper end cars even today, which is a phenomenon we have not seen since the 90s. And because of the consumption and some amount of inflation eating the amount of savings that a household has, the household has increased its discretionary spend.
I expect that to start peaking out. But given the rise in interest rate, a lot of money is also moving to term deposits and debt. So that is a positive sign that the investor, the retail person or even the HNI is moving money into fixed deposits and term deposits given the interest rates, the large retirement public is also moving towards that. So, you will see deposit growth. You have seen banks raise their deposit growth in keeping with rates and interest and I think it will always be a factor that you have to say that term deposits, fixed deposits will grow, overall deposits will grow in line with the industry. And what is the outlook on the net interest margins because it seems like the best ever net interest margins do not seem to have peaked and there is an indication that this can also expand further?I think this is in line with the industry if you look at all the major banks in the industry and the reason is clear, because thanks to the increase in the repo rate and the linkage of repo rate to consumer and other loans, the transmission of the interest rate on the lending book has happened. The deposit pricing is always slower because the deposit you have a large and let us say somebody like Kotak has benefitted from having a very large CASA book. We were at 60% CASA. So having that advantage, the deposit pricing is slower than the asset pricing and that is why the NIM expands. I think it is likely to continue this quarter and we will have to wait and see how soon the cost of deposits catch us and this is so for the entire industry.