Mumbai: Bank credit grew at a higher rate of 25.8 per cent till 1 August this financial year, compared with 23.3 per cent growth posted during the same four-month period a year ago - showing that the Reserve Bank's liquidity squeeze has failed to stem credit flow.

During the current financial year till August, bank credit grew at 2.8 per cent, compared with a negative 0.1 per cent growth in the same period last fiscal, according to data provided in the RBI weekly statistical supplement.

Outstanding bank credit stood at Rs24,27,592 crore while banks have extended credit worth Rs65,678 crore since April 2008. Advances declined by Rs1,787 crore in April-July 2007. The RBI expects a 20 per cent growth in adjusted non-food credit in 2008-09.

Since April, RBI has hiked its borrowing rate for the banks – the repo - by 125 basis point to 9.0 per cent and the cash reserve ratio (CRR) – the amount of money banks have to keep with the RBI – by 150 points to 9.5 per cent.

Growth in deposit flow to the banks, however, dipped to 20.9 per cent till early August this fiscal against a 24.4 per cent rise in the same period last year.