Key Points
Credit growth continued to outpace deposit growth in FY'23 at an eleven year high even as banks have transmitted fully -250 bps - their lending rates linked to external benchmarks which now comprise almost half of floating rate loans..
Credit demand may not be linked to interest rates but more to economic activity, notings in the RBI's monetary policy report suggest...
While bank loans rose 14.6 percent in FY'23, deposits rose just 9.6 percent..
An econometric analysis of monthly non-food credit and deposit data of all commercial banks for the period April 2007-December 2022 by the Reserve Bank shows that bank deposits and credit comove over time or in other words move in tandem..
"The credit growth is driven by a rebound in economic activity and is supported by an improvement in deposit growth" RBI said in its latest MPR.. " Bank credit expected to grow by 15% in fiscal 2024, supported by revival in corporate credit" said a report by crating firm Crisil..
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