Systemic credit growth stood at 10.03 percent year-on-year in the fortnight ended August 22, signalling that banks are ramping up credit ahead of the festival season amid rate cuts and expected consumption boost following GST regime overhaul.
This the third consecutive fortnight that credit growth remained in double digits. According to Reserve Bank of India (RBI) data, credit growth was at 10.22 percent in the fortnight ended August 8 and 10.03 percent as on July 25.
Deposits grew at 10.22 percent, outpacing credit growth by 19 basis points (bps).
Bank deposits stood at Rs 235.04 lakh crore as on August 22, against Rs 213.25 lakh crore as on August 23, 2024, RBI data shows.
The investment of banks in the central and state government securities grew 2.4 percent year-on-year to Rs 65.17 lakh crore as on August 22.
Experts are of the view that the GST cuts have set the stage for a demand revival that could spill over into stronger bank lending even as trade uncertainties and tariff risks continues.
The cuts comes weeks ahead of the peak festival period which typically sees an uptick in big-ticket purchases such as vehicles, consumer durables and even homes.
On September 3, the goods and services tax council cut levies on small cars, televisions, air conditioners, textiles and a range of household goods from September 22, in a major rate overhaul aimed at spurring consumption ahead of the festive season, even as Trump's tariffs threaten the country's exports.
The 56th meeting of the GST council, chaired by finance minister Nirmala Sitharaman, approved a two-tier rate structure of 5 percent and 18 percent.
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