India’s Non-Food Bank Credit Growth Slows to 10.2% in June 2025, Down from 13.8% a Year Ago.
Banking & Finance
According to the Reserve Bank of India’s Financial Stability Report as of the fortnight ending June 27, 2025, non-food credit growth decelerated sharply to 10.2% year-on-year, down from 13.8% in June 2024, reflecting weakening demand across key sectors amid economic uncertainty.
- Deposit growth stood at around 10.5% year-on-year by June 2025, nearly matching the pace of credit — resulting in a notably smaller gap between deposits and bank lending. This marks a significant shift from previous years when credit had outpaced deposit mobilisation.
- Loan disbursals to agriculture and allied activities slowed drastically to 6.8%, versus 17.4% a year ago, while services-sector credit decelerated sharply to 9.6% from about 15%, pulling down aggregate non-food credit growth.
- Consumer credit witnessed marked moderation, with personal loans, vehicle finance, and credit card lending growing at much slower rates. For instance, personal loan growth slipped from over 13% to roughly 9%, and credit card outstanding growth dropped to the single digits.
Main Point :- (i) Credit growth to large industries slowed to around 0.8%, while MSMEs, particularly micro and small firms, saw higher lending growth of close to 19%, becoming one of the few bright spots in the credit landscape.
(ii) The component of retail deposits surged, while wholesale and corporate deposits declined, causing the liquidity coverage ratio (LCR) to rise sharply as banks parked excess funds in government securities rather than extending loans.
(iii) RBI’s regulatory tightening—raising risk weights on unsecured retail and NBFC lending in late 2023—has cooled demand in fragile credit segments, even as corporate firms increasingly raise funds through bond and equity markets instead of bank loans.
About RBI
Governor : Sanjay Malhotra
Headquarter : Mumbai
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