Bank credit growth fell to a 50-year-low of 6.14% in 2019-20, according to RBI data. The advances stood at ₹103.71 lakh crore as of March 27, 2020 compared to ₹97.71 lakh crore as on March 29, 2019. In 2018-19, credit offtake was 13.3%. Meanwhile, bank deposits grew by 7.93% to ₹135.71 lakh crore during 2019-20, as per RBI data.
“The economy during the year was weak which led to demand slowdown. Also, there was higher risk aversion among banks,” Saswata Guha, Director (Financial Institutions) at Fitch Ratings said.
The country’s economic growth slowed to a near seven-year low of 4.7 percent in October-December 2019 compared to 5.1 percent in the second quarter and 5.6 percent in the first quarter of the current fiscal.
Guha said one has to see the June quarter numbers when the impact of COVID-19 on the overall economy will be visible.
In its latest monetary policy report released recently, RBI had said credit growth is likely to remain modest, reflecting weak demand and risk aversion due to the disruptions caused by the COVID-19 pandemic.