Bank credit surges 16% in fiscal year, marks fastest growth in a decade

Kolkata: Bank credit during the fiscal year gone by grew by 16%, the fastest in the last 10 years reflecting their higher appetite for lending backed by stronger financial metrics with the systemic cleansing of their balancesheets.

The economic recovery from the pandemic years as well as higher and sustained retail demand for loans supported banks' higher credit growth print.

According to latest set of weekly data released by the Reserve Bank of India, bank loans grew 16.1% year-on-year at the end if April 5, despite higher interest rates.
The growth print is higher at 19.9% if the merger of the Housing Development Finance Corporation into HDFC Bank is considered.

While the credit growth is largely backed by retail demand, top bankers said that the corporate demand for loans us also on the rise with private sector capacity expansion.

"The prospects of fixed investment remain bright with business optimism, healthy corporate and bank balance sheets, robust government capital expenditure and signs of upturn in the private capex cycle," the regulator said, according to the minute of the last monetary policy meeting held earlier in the month.

The monetary policy committee observed that domestic economic activity remains resilient, backed by strong investment demand and higher interest rates could not dampen the upbeat business and consumer sentiments.

"A rise in discretionary spending expected by urban households, as per the Reserve Bank’s consumer survey, and improving income levels augur well for the strengthening of private consumption," RBI said

An expected normal south-west monsoon should support agricultural activity while manufacturing is expected to maintain its momentum on the back of sustained profitability.

The banks' aggregate deposit grew 13.2% year-on-year while the growth was recorded AR 13.8% if the merger is considered.