CRISIL analysis: Three things that could curb bank credit growth this year

Bank credit growth is expected to moderate this financial year after a robust 16 per cent  estimated for last financial year, driven  by strong economic activity and retail credit demand. 

There are three reasons for this: a statistical high-base effect given the strong growth seen last financial year, revision in risk weights by the Reserve Bank of India (RBI), and relatively slower economic activity. 

The RBI’s increase in risk weights on bank lending to non-banking financial companies (NBFCs) and on unsecured loans has pruned credit growth in these segments. Further, an expected moderation in growth in the country’s gross domestic