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The credit growth of banks slowed to 9.8 per cent in May 2025 as compared to a strong growth of 19.5 per cent recorded in the same period last year, according to a report by the State Bank of India (SBI).
The report highlighted a clear deceleration in lending activity across all major sectors of the economy. SBI said, "Scheduled commercial banks' (SCBs) credit growth slowed to 9.8 per cent as on May 16, 2025, compared to last year growth of 19.5 per cent." During April-May this year, bank credit actually declined by Rs 15,676 crore, showing a negative year-to-date (YTD) growth of 0.1 per cent. In contrast, during the same period last year, bank credit had grown by Rs 1.68 lakh crore, or 1.0 per cent YTD. On the other hand, deposit growth remained positive but was also slower than the previous year. Deposits grew by Rs 3.06 lakh crore (1.4 per cent YTD) during April-May this year, compared to Rs 3.39 lakh crore (1.7 per cent YTD) last year. The report pointed out that sector-wise credit for April 2025 showed a slowdown in all sectors. Credit to agriculture and allied activities grew by 9.2 per cent, sharply lower than 19.8 per cent a year ago. Credit to the industrial sector rose by 6.6 per cent, slightly down from 7.4 per cent last year. However, within the industry segment, there was an increase in credit to sectors like basic metal and metal products, engineering, vehicles and transport equipment, textiles, and construction. On the other hand, credit growth in the infrastructure sector slowed down. In the services sector, credit growth dropped significantly to 10.5 per cent from 22.0 per cent last year. This was mainly because of a sharp slowdown in lending to non-banking financial companies (NBFCs). Still, credit to segments such as trade and computer software remained strong. The personal loans segment also saw a slowdown. Growth in this category eased to 14.5 per cent year-on-year, compared to 17.0 per cent last year. This was mainly due to reduced growth in vehicle loans, credit card dues, and other personal loans. The overall trend indicated a broad-based slowdown in credit demand across the economy in the early months of the financial year 2025-26. (ANI)
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