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Aided by the Goods and Services Tax (GST) rate reduction and increased demand during the ongoing festive season, bank credit grew by 11.38 per cent, the fastest growth in over eight months, in the fortnight ended October 3, 2025, the Reserve Bank of India (RBI) data showed.
During the reporting fortnight, banks disbursed loans to the tune of Rs 192.66 lakh crore, compared to Rs 172.98 lakh crore in the fortnight ended October 4, 2024. In the fortnight ended January 24, 2025, bank credit had registered a growth of 11.41 per cent. On a fortnightly basis, bank advances saw an increase of 1.92 per cent.
The government had rationalised GST with effect from September 22. It abolished multiple GST rates of 5 per cent, 12 per cent, 18 per cent and 28 per cent, and introduced a two-slab structure of 5 per cent and 18 per cent. The move has helped in spurring the domestic demand in the festive season amidst the US tariff related uncertainties.
“There has been pent up demand. A lot of spending was held back in the early part of September since the new structure of GST was to be applicable from 22nd of the month,” Bank of Baroda said in a recent report.
Inflation in general is trending downwards which will increase real disposable income, it said. Consumer Price Index (CPI) inflation fell to an eight-year low of 1.54 per cent in September, from 2.07 per cent in August.
“Income tax relief given in the Budget should also help to prop up spending. While such benefits accrue over the year, savings in tax in the first six months should provide a boost in spending in the second half,” the report said.
Further, bank deposits grew at 9.94 per cent to Rs 240.98 lakh crore in the reported fortnight, compared to Rs 219.2 lakh crore in the fortnight ended October 4, 2024, the RBI data showed.
