Non-food credit in the banking system grew 9.23% year-on-year (y-o-y) during the fortnight ended October 28, up from 9.01% in the previous fortnight.
The credit growth was weak over the last few months due to low corporate demand and lack of fresh investments.
Non-food credit at the end of the fortnight under review stood at Rs 73.1 lakh crore, according to data released by the Reserve Bank of India. Growth in deposits with banks fell 9.8% y-o-y, against 10.4% y-o-y in the previous fortnight, to Rs 99.84 lakh crore. In September, the growth in deposits had crossed the Rs 100 lakh crore mark for the first time.
With minimum growth in project loan sanctions, the 9.23% credit growth is most likely a function of demand from the retail segment, something that several large banks have lately been focusing on.
Analysts have said they do not expect material improvement in credit growth in FY17, factoring in an average 12% growth over last year.
Another contributing factor to the slowing demand could be the fact that companies have been moving their borrowings to the corporate bond market due to lower interest rates.