Credit Growth Far Away From Being Considered As 'Exuberant', Says RBI Governor Shaktikanta Das

The present credit growth is far away from being considered as "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 on Wednesday.

“I think the credit growth at the current point is certainly far far away from exuberance or something like that. It is definitely very, very steady. We are monitoring it very very carefully,” Das said, while speaking at the BFSI Summit organised by Business Standard.

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.

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.

Das said 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.

He said the credit growth, apart from being driven by base effects, is also indicative of the underlying fundamentals of the economy.

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.

Replying to a question on the banking system being unfair to savers, Das said the deposit rates in the system are already moving up and he expects them to move up further.

He said while the lending rates have moved up by 1.17 per cent, the deposit rates have gone up by 1.50 per cent in the system.