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Bank Credit Growth Stays Tepid Despite 100 bps RBI Cuts

30 June 20251 min read
ECONOMYBank CreditGrowth StaysTepid Despite 100bps RBI Cuts30 June 2025safalsetu.com

Why in the news

Despite steep cuts, banks did not raise forecasts, reflecting weak demand and tight deposit mobilisation.

Key facts

  • Reasons: weak Q1 credit demand, retail deposit difficulty, market uncertainty.
  • CRR cut runs September to November; festival demand awaited.
  • Finance Ministry urged public sector banks to lend more.
  • Soft segments: unsecured personal loans, mortgages, NBFC lending.

Outlook

  • Microfinance stress may ease by September.
  • Liquidity surplus exists, but transmission to credit is uneven.

Exam angle

  • Guidance: credit 11-13%, deposits 9-10%.

Test yourself

1. Banks retained their FY26 credit growth guidance at which range despite RBI rate cuts?

Guidance stayed at 11-13%.

2. How large was RBI's repo rate cut between February and June 2025, as per the credit growth news?

The repo rate fell by 100 bps.

3. An SBI report estimates the CRR cuts could add roughly how much to credit growth?

The estimate is 1.4-1.5% additional credit growth.