Credit offtake up 17.2% as of mid-Dec

Non-food credit has grown 17.2% to Rs 44 lakh crore during 12 months to December 16, according to the Reserve Bank of India (RBI).

The offtake had stood at Rs 37.53 lakh crore during the 12 months to December 17, 2010.

This is the third consecutive fortnight when the annualised credit growth has stayed below 18%.

Experts said the slowdown in credit growth is on account of the high interest rate regime, which has been in place for over a year to rein in inflation.

The RBI has raised key lending rates by 350 basis points through 13 hikes since March, 2010 to curb inflation, which has been above the 9% mark since December last year. The rate of price rise was 9.11% in November.

Deposits rose to over Rs 58.32 lakh crore as on December 16, as against Rs 49.50 lakh crore as of December 17, 2010. This is a growth of 17.8%.

In its first quarterly monetary policy review for FY12 in July, RBI had said that credit growth was likely to slow down as a result of the rate hikes.

It projected the growth to be around 17-18% this fiscal, as against the earlier estimation of 19%, while deposit growth had been pegged at 17%.

During FY11, bank credit offtake increased by 21.5%, while deposits grew by only 15.5%.

Indian industry has complained that the high interest rate regime has resulted in slowing down of investments and the industrial growth.

Economic growth slowed to a nine-quarter low of 6.9% in the July-September period. Besides, industrial growth entered the negative trajectory in October and contracted by 5.1%.