Banks' loan growth slows for eighth straight month in February, RBI data shows
The Hindu
Loan growth at banks moderated for an eighth straight month in February, Central bank data showed on March 27, 2025, due to a drop in personal and credit card loans following tighter rules by the Reserve Bank of India.
Loan growth at banks moderated for an eighth straight month in February, Central bank data showed on Thursday (March 27, 2025), due to a drop in personal and credit card loans following tighter rules by the Reserve Bank of India.
The data showed that banks' credit increased by 12% year-on-year last month, slower than the 16.6% rise a year earlier, excluding the impact of HDFC Bank's merger with parent Housing Development Finance Corp.
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Including the merger impact, loans grew 11% in February, compared with 20.5% in the year-ago period.
The loan growth rate slowed to 12.5% in January, excluding the merger, and to 11.4% including the merger.
The banking sector saw rapid loan growth for several years, driven by retail demand for unsecured loans. However, the RBI intervened in late 2023, imposing stricter capital requirements on personal loans, credit card loans as well as credit to non-banking finance companies (NBFCs).
Concerned about potential bad loans, the RBI's tighter lending norms aimed to mitigate risk. Banks simultaneously reduced lending to optimise their credit-deposit ratio - a key liquidity metric - amid a scramble to raise deposits.
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