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India's Credit Surge: 14.5% Growth Fueled by GST Cuts
12 Jan
Summary
- Credit demand grew 14.5% year-on-year by the end of December.
- Investment proposals rose to ₹26.62 lakh crore in nine months.
- Outstanding bank credit surpassed ₹200 lakh crore for the first time.
Credit demand in India has seen a notable acceleration, reaching a 14.5% year-on-year growth by the close of December. This surge is attributed to the reduction in the goods and services tax and a more supportive monetary policy stance, which have collectively stimulated investment activity.
Investment proposals during the first nine months of the financial year increased to ₹26.62 lakh crore, a rise from the previous year's ₹23.62 lakh crore. Consequently, outstanding bank credit crossed the ₹200 lakh crore threshold for the first time, with year-to-date credit expansion reaching ₹20.78 lakh crore. This growth rate surpasses projections made by the Reserve Bank of India.
The rebound in credit growth is predominantly fueled by auto loans, demand from small and mid-sized companies, and the home loan segment. While a base effect and potential month-end window dressing might inflate the figures, the underlying positive investment climate, supported by decreasing interest rates, suggests sustained resilience.
