1. Bank credit grows at snail’s pace

Bank credit grows at snail’s pace

Bank credit growth has slowed as lenders have been slow to pass on successive repo rate cuts by the RBI on account of slow reduction in their cost of funds.

By: | Updated: October 20, 2015 1:40 AM

Bank credit growth has slowed as lenders have been slow to pass on successive repo rate cuts by the RBI on account of slow reduction in their cost of funds. Credit to industry and services sectors slumped to 5-6% y-o-y in September from 10-20% in mid-2013. Retail credit, however, is growing at a healthy rate of 16-17% y-o-y. Domestic corporates have shifted to the money market, where interest rates on corporate bond rates and CP rates have fallen to 8.3% and 8.5%, respectively, in September 2015 against an average bank base rate of 9.85%.

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