The Reserve Bank started raising interest in May 2022 to rein in inflation in the wake of global supply disruptions, following the Russia-Ukraine war.
The share of loans bearing over 9 per cent interest rate rose to 56.1 per cent in March 2023, in tandem with the monetary tightening measures starting May 2022, said a Reserve Bank report on Friday.
The Reserve Bank started raising interest in May 2022 to rein in inflation in the wake of global supply disruptions, following the Russia-Ukraine war. Since then the benchmark short-term lending rate has increased by 250 basis points. However, the RBI did not raise the rate in its last two bi-monthly monetary policy reviews.
“Consistent with the monetary tightening measures during 2022-23, the share of loans bearing over 9 per cent interest rate rose to 56.1 per cent in March 2023 from 31.4 per cent a year ago,” said the Basic Statistical Return on Credit by Scheduled Commercial Banks in India – March 2023.
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The RBI further said all population groups recorded substantially higher credit year-on-year growth in 2022-23.
The annual growth in lending by metropolitan branches of banks accelerated to 15.2 per cent in 2022-23 from 9.2 per cent growth in the previous year and 1.4 per cent growth in 2020-21. Rural, semi-urban and urban branches have recorded double-digit growth in all these three years.
Personal loans are growing at a robust pace in recent years; their share in total bank credit has risen to 28.2 per cent in March 2023 from 21.3 per cent five years ago.
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The central bank also said despite acceleration during 2022-23, industrial loan growth remained well below the growth in total credit; industry share in total bank credit has declined to 25.0 per cent in March 2023 from 34.7 per cent five years ago.
