Despite high interest rates, credit offtake from banks grew by 20.7% to over Rs 41 lakh crore during the one-year period ended August 26, 2011, indicating momentum in the country's economic activity.
According to the Reserve Bank of India (RBI) data, credit offtake during the period was Rs 41.70 lakh crore as against Rs 34.54 lakh crore in the 12 months ending August 27, 2010.
The year-on-year credit growth had fallen below 19% in mid-July and the latest upswing suggests renewed borrowing.
Meanwhile, deposits went up to over Rs 56.62 lakh crore till August 26 this year, against Rs 48.18 lakh crore as on August 27, 2010, clocking a rise of 17.5%.
In its first quarterly monetary review in July, RBI had said that credit growth is likely to slow down as a result of the recent rate hikes.
RBI said credit growth would be around 17-18% this fiscal, as against the earlier projection of 19%, while deposit growth has been pegged at 17%.
During 2010-11 fiscal, bank credit had increased by 21.5%, while deposits grew by only 15.5%.
India has complained that frequent rate hikes have resulted in slowing down of investments and industrial growth. While industrial production recorded a dismal growth of 5.9% and 5.6% in April and May, respectively, it went up by 8.8% in June.
The Reserve Bank has hiked its key-policy rates three times this fiscal, and 11 times since March 2010, to curb inflation which was at 9.22% in July.
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