'Bank credit growth lags deposit growth'

India's credit growth continues to be sluggish due to slow economic growth. Reserve Ba-nk of India data released on Wednesday show credit grew 14.53 per cent year-on-year (y-o-y) as on December 27.

While the deposit growth in the banking system is ahead of the credit growth, on a y-o-y basis it stood at 15.86 per cent in the same period. On a fortnightly basis ended December 27, credit grew by 0.96 per cent while deposits recorded a fall of 0.30 per cent.

The monetary transmission in the system has been slower because banks have been reluctant to hike lending rates much due to slow credit pick up.

In a bid to boost retail loans, banks have been offering special interest rates to borrowers in the festive season for home and auto loans. But, despite that, the growth continues to be slow. Besides that credit growth in the industry sector is also lagging behind due to slow economic growth.