Indicating the demand slowdown in the economy, the Reserve Bank of India (RBI) on Tuesday said non-food bank credit showed a lower growth of four per cent in December 2016, compared with an increase of 9.3 per cent in December 2015 at a time when the economy was roiled by demonetisation.
With cash shortage hitting demand, credit growth to agriculture and allied activities fell to 8.2 per cent in December 2016, compared with a rise of 12.7 per cent in December 2015.
On the other hand, credit to industry contracted 4.3 per cent in December 2016, in contrast with an increase of 4.9 per cent in December 2015. Major sub-sectors which witnessed deceleration/contraction in credit include food processing, infrastructure, chemical and chemical products, all engineering, textiles and basic metal and metal products, the RBI said.
Even personal loans rose only 13.5 per cent in December 2016, against 18.5 per cent a year ago. Credit to the services sector rose 8.3 per cent in December 2016, 8.1 per cent a year ago.