Bad news related to the economy came amid RBI’s MPC meeting, this big loss due to increase in interest rates?

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Reserve Bank: For the last three times, interest rates have been increased by 1.4 percent. At present, the meeting of the Monetary Policy Review Committee (MPC) is going on, the RBI Governor will announce the interest rates tomorrow. But before that a bad news related to the country’s economy has come.

The share of industrial credit declined

The Reserve Bank of India (RBI) in a recent report said that the share of industrial credit in total debt has gradually declined over the past decade while the share of personal loans has increased. Business credit is generally considered to be the benchmark of economic growth. But the way the economy is showing a slowdown, the Reserve Bank is repeatedly raising interest rates to contain inflation, its effect is seen on the country’s economy.

small loan increase

According to the report released by RBI titled ‘Basic Statistical Return on Credit of Scheduled Commercial Banks in India – March 2022’, the share of industrial and personal loans was around 27-27 per cent in March 2022. Industrial sector credit grew by 4.7 per cent in 2021-22 as against a decline recorded a year ago. RBI said the demand for credit from the retail sector has increased in recent years. The share of small size loans is also increasing continuously.

Debt reduction of more than 10 crores

The share of debt up to Rs 1 crore rose to about 48 per cent in March 2022 from 39 per cent five years ago. At the same time, the share of loans above Rs 10 crore came down to 40 per cent from 49 per cent five years ago. It said that the share of public sector banks in total bank credit is declining.

Increased dominance of private bank instead of government bank

The share of public sector banks in the total credit of scheduled commercial banks stood at 54.8 percent in March 2022. It was 65.8 percent five years ago and 74.2 percent 10 years ago. On the other hand, the share of private sector banks nearly doubled to 36.9 per cent in the last ten years.

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