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The Reserve Bank of India (RBI) in its latest data has showed that banking system's credit growth at the end of the June quarter (Q1FY23) accelerated to 14 per cent as compared to the year-ago period despite hike in lending rates. The numbers based on data reported by 89 scheduled commercial banks excluding the performance of the regional rural banks are much higher than the 10.7 per cent growth in the preceding March quarter, and 5.8 per cent in the June 2021 quarter.

It stated that the growth came despite a 0.21 per cent increase in the weighted average lending rate on the outstanding loans and that this was the first quarter of a hike after ten successive quarters of a decline. It can be noted that in early May, the RBI started its rate hikes in response to the runaway inflation. Growth in personal loans at 20.8 per cent in June 2022 drove the overall system credit growth, the data said, adding that this growth came despite a 0.31 per cent increase in WALR in this segment. Credit to industry grew at 7.2 per cent in June 2022 quarter, up from 4.8 per cent in the quarter-ago period, and both term loans and working capital loans grew in double digits.

Data further indicated that share of individuals in total credit increased to 44.1 per cent in June 2022 from 43.7 per cent in the previous quarter. Credit growth for female borrowers outpaced the growth in loans availed by male customers. Private sector banks continued to record higher credit growth than their state-run rivals, and the share of private sector banks in total credit has now increased to 38 per cent from 35.3 per cent in June 2020 and 22.2 per cent in June 2015. The private sector lenders accounted for 47.8 per cent of the incremental credit during the last one year to June 30.