India’s bank credit growth showed signs of moderation in May 2025, even as scheduled commercial banks (SCBs) posted a marginal rise in annualised credit expansion to 10.4 per cent as of June 27, up from 9.9 per cent a month earlier, the Reserve Bank of India (RBI) said in its latest bulletin.
Representative Image (IANS)
India’s bank credit growth showed signs of moderation in May 2025, even as scheduled commercial banks (SCBs) posted a marginal rise in annualised credit expansion to 10.4 per cent as of June 27, up from 9.9 per cent a month earlier, the Reserve Bank of India (RBI) said in its latest bulletin.
The slowdown was broad-based across sectors, with non-food bank credit growth easing to 9.8 per cent year-on-year in May, down from 11.2 per cent in April. Lending to Non-Banking Financial Companies (NBFCs) contracted year-on-year, although the segment raised significant funds via the capital markets.
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Personal loan growth, the mainstay of retail credit, decelerated sharply, dragged by slower momentum in vehicle loans and credit card outstandings. Housing loans, however, continued to anchor the segment. Credit to the industrial sector remained subdued, particularly in infrastructure, while MSME lending stayed strong.
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On the deposit side, SCBs recorded an annual growth of 10.3 per cent as of end June, up from 10.1 per cent in May, supported by residual momentum.
Amid a 100-bps policy rate cut since February, banks reduced external benchmark-linked lending rates by 100 bps and marginal cost-based rates by 10 bps. Public sector banks led the decline in lending rates. Average lending rates on fresh rupee loans fell 26 bps between February and May, while deposit rates on fresh term deposits fell 51 bps.
Savings deposit rates also declined, with some PSBs hitting record lows since deregulation in 2011. Small savings rates remained unchanged and continue to offer a higher spread over formula-based rates.
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