The Economic Survey attributed the moderation in credit growth in FY25 so far to an increase in lending rates (as a result of monetary policy transmission of higher policy rates to higher lending rates) and the imposition of increased capital requirements by the RBI for unsecured personal loans, credit cards and lending to non-banking finance companies (NBFCs).

In the current financial year, up to December 27, 2024, the growth rate in non-food credit has been 7.5 per cent compared to a growth of 11 per cent over the same period last year.

Sector-wise, the growth in agriculture credit as of November 29, 2024 in the current financial year was 5.1 per cent. The growth in industrial credit picked up and stood at 4.4 per cent as of the end of November 2024, higher than 3.2 per cent recorded a year ago.

Across industries, bank credit to micro, small, and medium enterprises (MSMEs) has been growing faster than credit disbursal to large enterprises. As of the end of November 2024, credit to MSMEs registered a year-on-year growth of 13 per cent, whereas it stood at 6.1 per cent for large enterprises.

Credit growth to the services and personal loans segments also moderated to 5.9 per cent and 8.8 per cent, respectively, as of end- November 2024 in the current financial year.

“Amongst the services sector, the moderation has been driven by a slowdown in credit disbursal to NBFCs. Vehicle and housing loans drove the moderation in the personal loans segment. In terms of increasing risk weights to NBFCs and credit cards, RBI’s policy interventions contributed to the moderation of credit growth in those segments,” the ES said.

Deposit growth

The Survey noted that against the backdrop of the recent monetary policy tightening cycle in India, bank deposits continue to exhibit double-digit growth. However, their profile has gradually shifted towards schemes offering higher returns.

“Growth in term deposits continues to outpace the current and savings account deposit growth. As of the end of November 2024, the YoY growth in aggregate deposits of Scheduled Commercial Banks stood at 11.1 per cent. The growth in bank credit has started converging towards deposit growth,” it said.

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