Non-food credit grew 17.8% to over Rs 43.66 lakh crore in the 12 months ending 2 December 2011 according to data released by the Reserve Bank of India. The offtake had stood at Rs 37.04 lakh crore during the 12 months to 3 December 2010. For the second consecutive fortnight when the annualised credit growth stayed below 18%.
A per the experts, slowdown in credit growth is on account of the high interest rate regime, which was increased 13 times since March 2010 with a view to reining in high inflation. Deposits rose to Rs 58.69 lakh crore as on 2 December 2011 as against Rs 49.89 lakh crore as of 3 December 2010 marking a growth of 17.6%.
RBI raised key policy rates by 350 basis points through 13 hikes since March,2010 to curb inflation, which has been above the 9% mark since December 2010. The rate of price rise was 9.11% in November 2011.
RBI had in its first quarterly monetary policy review for 2011-12 in July projected credit growth to be around 17-18% in 2011-12, as against the earlier estimation of 19%, while deposit growth had been pegged at 17%.
During the financial year 2011 bank credit offtake increased by 21.5%, while deposits grew by only 15.5%.
Economic growth slowed to a nine-quarter low of 6.9% in the July-September 2011. industrial growth also entered the negative trajectory in October and contracted by 5.1%.
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