Credit demand climbs to 11.5% as deposits lag, RBI data shows

Kolkata: Demand for credit continued to rise while deposit growth remained unchanged, according to the fortnightly data update by the Reserve Bank of India.

The credit growth print was recorded at 11.5% on-year at the end November 28, one basis point up from the print seen 15 days back. The expansion of credit was however significantly higher when compared with 10.6% seen at the same time last year.

The growth was supported by sustained lending to retail and service sector segments, as outlined by RBI Governor Sanjay Malhotra during his monetary policy speech. Industrial credit growth firmed up, aided by buoyant credit flow to micro, small and medium enterprises (MSMEs), he had said.


While deposit growth remained at 10.2% over the last two fortnight, the pace of deposit mobilisation was slower when compared to same time last year's 10.7%.

The outstanding deposits at the end of the reporting fortnight stood at Rs 242.6 lakh crore while advances were at Rs 195.3 lakh crore, making the credit deposit ratio rise a bit to 80.49% from 80.4% a fortnight back. The ratio was 77.7% a year back.

The reduction in the repo rate by another 25 basis points to 5.25% in the December policy is expected to steer higher demand for credit going forward. The demand is already being spurred by the higher disposable income at the hands of consumers after the reduction in goods and services tax (GST) on several items, people aware said.

The GST rationalisation and festival-related spending supported domestic demand during October-November, the RBI had said earlier in the month. "Rural demand continues to be robust while urban demand is recovering steadily," it added.

Top bankers are expecting higher credit growth in the third and fourth quarters given the favourable push by both the fiscal and monetary authorities.