Slack in credit growth

Despite rosy economic growth numbers of the last quarter, bank credit, especially to industry, has failed to pick up.


Low investment demand, fewer new projects and banks’ reluctance to lend as they clean up their balance sheets have slowed credit growth. Photo: Mint
Low investment demand, fewer new projects and banks’ reluctance to lend as they clean up their balance sheets have slowed credit growth. Photo: Mint

Credit growth slowed to 8.7% for the fortnight ended 10 June from 9.8% in the year-ago period.

One reason is a 17% year-on-year fall in food credit which makes up about 1.3% of total bank credit.

But these numbers also show that despite rosy economic growth numbers of the last quarter, bank credit, especially to industry, has failed to pick up because of low investment demand, few new projects, and banks’ reluctance to lend as they clean up their balance sheets.

The chart shows year-on-year credit growth in June for the last 20 years.

READ MORE