HomeBudgetEconomic Survey 2025 pins steep interest rates and RBI's curbs on unsecured loans for moderation in credit growth
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Economic Survey 2025 pins steep interest rates and RBI's curbs on unsecured loans for moderation in credit growth

Overall bank credit growth had slowed to 7.7 percent, a clear reflection of the impact of higher lending rates stemming from monetary policy adjustments and the RBI's regulatory tightening, the report says

January 31, 2025 / 14:51 IST
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Economic Survey 2025 pins steep interest rates and RBI's curbs on unsecured loans for moderation in credit growth
Economic Survey 2025 pins steep interest rates and RBI's curbs on unsecured loans for moderation in credit growth

The Economic Survey 2025 has attributed the steep rise in interest rates to the Reserve Bank of India's (RBI) measures on unsecured lending for the moderation in credit growth.

The RBI’s decision to increase capital requirements for unsecured loans, credit cards, and loans to Non-Banking Financial Companies (NBFCs) from 100 percent risk weight, have contributed to the moderating credit growth, according to the report.

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As a direct result, by December 27, 2024, the overall bank credit growth had slowed to 7.7 percent, a clear reflection of the impact of higher lending rates stemming from monetary policy adjustments and the RBI's regulatory tightening.

As of November 2024, the y-o-y growth in aggregate deposits at SCBs was recorded at 11.1 percent, closely aligning with a moderated credit growth rate of 11.8 percent from 15.2 percent a year earlier.