Tuesday, April 27, 2021

What slow credit growth says about economic recovery

 

What slow credit growth says about economic recovery

The trend in credit and deposit growth rates

As per the Financial Stability Report of January 2021, year-on-year (y-o-y) credit growth of scheduled commercial banks was slowing down even before the pandemic. Credit growth rate in March 2020 was at 5.7%, which fell further to 5.0% by September 2020. On the other hand, deposit growth remained healthy at 10.3%, thanks to precautionary savings by people influenced by the virus-induced uncertainty. With signs of a probable V-shaped recovery, credit growth in the second quarter of FY21 did see an uptick at 6.2%; however, with the onslaught of the second wave, things might take another gloomy turn.



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