Bank credit in India grows nearly 21 per cent in 2011

Overall bank credit in India grew 20.67 per cent year-on-year to Rs4,489,867 crore as of 13 January 2012 from Rs3,720,760 crore as of 14 January 2011, showing that the high interest rates have not dented credit offtake in the country.

However, the incremental growth in credit has lagged with both credit and deposits growing at almost the same pace during the period.

Indian industry has been arguing for a lowering of lending rates, which it sees as one reason for slowing down of investment and industrial production.

The Indian economy is estimated to have grown at a slow 6.9 per cent during the July-September 2011-12 period.

According to RBI data, non-food credit increased 17.1 per cent during the 12 months to 13 January amid the high interest rate regime. Credit offtake has been growing at over 18 per cent on an annualised basis before it started slowing down.

Analysts attribute this slowdown to the high interest rate regime that has been in place for over a year.