Credit growth satisfactory, still lagging behind the targeted 24%

Bank credit grew by 18.8% to touch Rs 27,71,441 crore on year-on-year basis, at the end of March 27, 2009, according to the  latest Reserve Bank of India (RBI) data. The central bank has said that food credit was up by Rs 538 crore to Rs 46,749 crore.

In the wake of global economic meltdown, RBI has revised the credit growth target for the current financial year at 20% from 24% earlier and has asked banks to lend to the productive/priority sectors.

As the realty sector is trumpeted adversely by the global financial mess, it has now become attractive to many households as new homes are now available at throw-away prices, if compared to its peak. The loan books were also bulged on account of the Nano launch by Tata Motors.

The credit offtake will also get fillip from the repo and reverse repo rate cuts announced recently by the RBI and hence, banks are likely to reduce their lending rates.