Lockdown impact: Bank credit growth plunges 50% in fortnight to May 22

Banks had surplus liquidity of Rs 4.5 trn in the period

Banking system credit grew 6.5 per cent year-on-year in the fortnight ended May 22, down almost 50 per cent from a year ago, reflecting the impact of the  nationwide lockdown imposed at the end of March.

Credit grew at a similar pace — 6.5 per cent — in the previous fortnight, while it expanded 12.7 per cent a year ago (as of May 24, 2019), according to rating agency CARE Ratings.

Senior bankers said severe demand destruction during the lockdown was one of the reasons behind the fall in credit growth. The use of sanctioned credit would see a gradual rise as