The present credit growth in India is far away from being considered ‘exuberant’ and there is no ‘big gap’ between the credit growth and deposit accretion when looked at the absolute numbers, RBI Governor Shaktikanta Das said at the BFSI Summit organised by Business Standard on Wednesday.
Das said that currently, the credit growth is ‘far far away’ from exuberance and is very steady. When one compares the credit growth and deposit growth, it seems like a wide gap because of the base effects, Das said, adding that the credit growth is going up after two years of being depressed, while deposit growth number has come off a relatively higher growth during the pandemic years.
“Just as the credit growth looks very high because of the low base effect of the previous years, the deposit growth is also pretty low because of the base effects of the previous years,” he said.
Das acknowledged that he does get asked about deposits not growing, while credit is growing and if we are heading for an unsustainable situation and added that the answer to these concerns is in deposits growing to sustain credit growth over the medium to long term.
For the fortnight ending December 2, the system reported a credit growth of 17.5 per cent while the deposit growth has been trailing at 9.9 per cent, news agency PTI reported.
In absolute terms, the credit expansion for the year to December 2 had come at Rs 19 lakh crore, while the deposit growth was Rs 17.5 lakh crore, which makes it clear that there is no ‘big gap’ in the number, Das added.
He said the credit growth, apart from being driven by base effects, is also indicative of the underlying fundamentals of the economy.