Notwithstanding the high interest rate regime in the economy, non-food credit offtake from banks grew 19.6 per cent to over Rs 42.7 lakh crore during the 12 months to October 7.

According to the Reserve Bank of India data, credit offtake during the period stood at Rs 42.78 lakh crore against Rs 35.76 lakh crore during the 12 months to October 8, 2010.

Year-on-year credit growth fell below 19 per cent in mid-July, but has picked up again since August on renewed borrowing.

Meanwhile, deposits have risen to over Rs 57.82 lakh crore as of October 7 this year, against Rs 49.38 lakh crore as of October 8, 2010, translating into an increase of 17.1 per cent.

According to experts, while high interest rates have hit borrowings by the industry and services sectors, the ongoing festive season has led to heightened demand in the personal loans segment.

In its first quarterly monetary policy review for FY’12 in July, the RBI had said that credit growth was likely to slow down as a result of its rate hikes.

The RBI said credit growth would be around 17-18 per cent this fiscal against the earlier projection of 19 per cent, while deposit growth has been pegged at 17 per cent.

During FY2010-11, bank credit offtake increased 21.5 per cent while deposits grew only 15.5 per cent.

Corporate India has complained that frequent rate hikes have resulted in slowing down of investment and industrial growth.

Industrial growth slowed to 4.1 per cent in August. The country’s economic growth also slowed to 7.7 per cent in the April-June period, the lowest rate in six quarters.

The Reserve Bank of India has raised key policy rates by 350 basis points through 12 hikes since March, 2010, to curb inflation, which has been above the 9 per cent-mark since December last year. The rate of price rise stood at 9.72 per cent in September.

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