Bank credit growth in India moderated to 12.8% in October 2024, marking a slowdown from the 17.2% recorded in the same period last year, according to data released by the Reserve Bank of India (RBI). The deceleration is attributed to a combination of higher borrowing costs, subdued demand in certain sectors, and a high base effect from the previous year.
Source:- bbc news
On a month-over-month basis, credit growth exhibited marginal improvement compared to September 2024, when it stood at 12.4%. Analysts suggest this indicates stabilization in credit demand, albeit at a slower pace than the previous fiscal year.
Source:- news 18
Sectoral data reveals that personal loans, which form a significant portion of bank credit, grew by 18.2% year-on-year, driven primarily by robust demand for housing and vehicle loans. However, credit to industries saw a more modest growth of 6.4%, reflecting cautious borrowing by businesses amid lingering global economic uncertainties and elevated interest rates.
Meanwhile, the services sector, which includes trade, tourism, and transport, reported a credit growth of 12.1%, indicating steady expansion in economic activity. Agriculture and allied activities continued to show resilience with a credit growth rate of 15.4%, supported by government policies and rural demand.
Deposits also grew at a slower pace of 11.2% year-on-year in October, marginally lagging behind credit growth. This highlights the ongoing challenge for banks to maintain a balance between deposit mobilization and loan disbursements.
Economists expect credit growth to remain moderate in the coming months as the effects of the Reserve Bank’s monetary tightening persist. However, with inflation showing signs of easing and the economy maintaining a steady recovery, credit demand could pick up toward the end of the fiscal year.
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