Wide gap between bank credit and deposit growth seen declining

Lower GDP growth, RBI rate hikes, reversal of base effect to blunt credit growth, analysts say

Bank credit growth may be continuing to outpace growth in deposits by a long margin — a point that the Reserve Bank of India (RBI) has taken note of — but analysts believe the gap will start to narrow going into the next year.

Going forward, analysts expect a combination of factors, including the RBI’s rate hikes, slowing GDP growth, and the normalisation of the base effect to blunt the sharp growth in credit.

As on November 18, according to the latest RBI data, bank credit growth was at 17.2 per cent year-on-year (YoY) while deposit growth was at 9.6