Credit offtake up 20.5 per cent during 12 months to September 9

MUMBAI: Despite the high interest rate regime, credit offtake from banks grew 20.5 per cent to over Rs 42 lakh crore during 12 months to September 9, indicating strong momentum in the country's economic activity.

According to the latest Reserve Bank data, credit offtake during the period was Rs 42.01 lakh crore, as against Rs 34.85 lakh crore during 12 months to September 10, 2010.

The year-on-year credit growth had fallen below 19 per cent in mid-July, but has picked up again since August on renewed borrowing.

Meanwhile, deposits went up to over Rs 56.76 lakh crore till September 9 this year, as against Rs 48.42 lakh crore as on September 10, 2010 -- clocking a rise of 17.2 per cent.

In its first quarterly monetary review in July, RBI had said that credit growth is likely to slow down as a result of the recent rate hikes.

RBI said credit growth would be around 17-18 per cent this fiscal, as against the earlier projection of 19 per cent, while deposit growth has been pegged at 17 per cent.

During 2010-11, bank credit had increased 21.5 per cent, while deposits grew by only 15.5 per cent.

India Inc has complained that frequent rate hikes have resulted in slowing down investments and industrial growth.

In fact, industrial growth plunged to a 21-month low of 3.3 per cent in July. The country's economic growth was also down 7.7 per cent in the April-June period, the slowest in six quarters.

The Reserve Bank has hiked its key rates 12 times since March 2010, to curb inflation which has been above the 9 per cent mark since December last year. It was at 9.78 per cent in August, highest in 13 months.