Private banks see steepest fall in credit growth to 9.5% in FY25: RBI

RBI data shows private banks led credit slowdown in FY25, while retail loans grew faster than overall credit and savings deposit share continued to decline

Private-sector banks had a sharper drop in loan growth in FY25 when overall growth moderated to 11.1 per cent, from 15.3 per cent the year before.

 

Credit growth decelerated across all bank groups in FY 2024-25, according to data released by the Reserve Bank of India (RBI). Private banks had the steepest decline, of 9.5 per cent, in March after a sustained credit growth of above 15 per cent for the preceding three years.

 

The share of retail loans in the overall pie increased substantially in five years, rising to 31 per cent from 24.1 per cent. Although growth in this segment moderated to 13.2 per cent in FY25, it continued to outpace headline credit growth and led to a rise in its share. Consumer durables and other personal loans accounted for nearly one-third of total retail loans. 

   

The share of individuals in total credit kept its momentum, standing at 47.8 per cent in March 2025 compared to 41.5 per cent in March 2020. Within this group, the share of female borrowers also rose gradually — to 23.8 per cent from 22.0 per cent — over the same period.

 

On the liabilities side, the share of savings deposits continued to decline, falling to 29.1 per cent in March 2025 from 30.8 per cent a year ago and 33.0 per cent two years ago. Interestingly, many banks have cut their savings deposit rates in recent months, largely to protect net interest margins.

 

While the share of savings deposits fell, that of fixed deposits increased.

 

RBI’s data showed that the share of term deposits bearing interest rates of 7 per cent and above rose to 72.7 per cent in March 2025, compared to 64.2 per cent a year ago and 33.5 per cent two years ago.