Credit surge continues: Banks log over 10% growth for seventh week post GST reduction

Bank credit

Bank credit growth stayed firmly in double digits for the seventh straight week, rising 11.42 percent year-on-year in the week ended November 28, RBI data showed, extending a run that began after the government announced GST rate cuts in early September.

According to the Reserve Bank of India’s (RBI) data, credit growth was 11.28 percent as of November 14, before edging up to 11.42 percent.

Weekly prints since September have consistently remained above 10 percent: 11.18 percent (Oct 31), 11.36 percent (Oct 17), 11.27 percent (Oct 3), 10.29 percent (Sep 19), and 10.21 percent (Sep 5).

On September 3, the GST Council approved a new two-tier structure of 5 percent and 18 percent. Finance Minister Nirmala Sitharaman, who chairs the Council, said the reductions were aimed at “the common man and the middle class.” Items shifted to the 5 percent slab included hair oil, toilet soap, soap bars, shampoos, toothbrushes, toothpaste, bicycles, tableware, kitchenware and other household articles.

In absolute terms, bank credit stood at Rs 200.11 lakh crore as of November 28, up from Rs 179.59 lakh crore a year earlier, and Rs 198.54 lakh crore as of November 14.

The stronger credit growth suggests a pickup in demand, particularly consumption-linked borrowing, following the GST cuts.

On September 16, Moneycontrol reported that both state-owned and private-sector bankers expected system credit growth to stay in the 11–15 percent range in the current financial year.