In a recent report, Crisil Ratings had said that bank credit growth
is likely to nosedive to a multi-decadal low of 0-1 per cent this fiscal as economic activity is sharply impacted by the Covid-19 pandemic.
According to India Ratings and Research, the sudden spike in bank deposits over the past few months is on account of a rise in overall borrowings of both central and state governments and not due to an increase in savings.
In April, the outstanding incremental non-food credit growth contracted 1.2 per cent to Rs 91 trillion, from Rs 92.12 trillion in March, the RBI data had showed.
On a year-on-year basis, non-food credit growth decelerated to 7.3 per cent in April 2020 from 11.9 per cent in the corresponding month last year, the data showed.
Loan growth to agriculture and allied activities decelerated to 3.9 per cent in April 2020, from 7.9 per cent in April 2019. Growth in advances to the services sector decelerated to 11.2 per cent from 16.8 per cent in April 2019.
Personal loan growth decelerated to 12.1 per cent in April 2020 from 15.7 per cent in April 2019.