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Credit growth remains strong

Credit growth remains strong
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First Published: Sun, Jun 05 2011. 09 52 PM IST
Updated: Sun, Jun 05 2011. 09 52 PM IST
The beginning of the fiscal year is usually a time when bank credit growth turns negative. That’s partly because banks window dress their balance sheets to show a high level of advances at the end of March, and partly because the first half of the year is, or rather used to be, the slack season for the economy.
Also see | Credit growth remains strong (PDF)
The chart shows, however, that this year non-food bank credit has already turned positive, in stark contrast to earlier years. In fact, this is the first time in six years that non-food credit has increased so early in the fiscal year. One reason for the growth could be more lending to the petroleum sector; but RBI data for the sector-wise deployment of bank credit at the end of April does not show a significant increase in lending to the sector. The growth in lending, therefore, seems to indicate that the economy remains strong, and RBI will need to step on the brakes again to slow it further.
Graphic by Yogesh Kumar/Mint
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First Published: Sun, Jun 05 2011. 09 52 PM IST