New Delhi [India], March 3 (ANI): After witnessing a downward trend since April 2024, credit growth in India has shown signs of recovery, rising to 11.4 per cent in January 2025, compared to 11.2 per cent in December 2024, according to a report by Anand Rathi Research.

This indicates an improvement in lending activity, signalling a revival in economic momentum.

The report said 'After being on a downtrend since Apr'24, credit growth has started to rebound, expanding at 11.4 per cent in January 2025.'

A similar trend was observed in deposit growth, which increased to 10.3 per cent in January 2025, after declining in December. This growth was mainly driven by a rebound in demand deposits and time deposits, which expanded to 6.6 per cent and continued on an upward trajectory.

Additionally, investments by banks in government securities (G-Secs) have remained strong since September 2024. The latest data shows an 11.1 per cent growth in G-Sec investments, aligning with the Reserve Bank of India's (RBI) norms for increasing high-quality liquid assets (HQLA) set in July 2024.

The report also mentioned that credit growth in the industrial sector remained steady at 11.7 per cent in January 2025. However, infrastructure credit saw a recovery of 1.6 per cent in January 2025 after hitting a 14-month low in December 2024.

This improvement suggests a potential revival in infrastructure financing, which is crucial for long-term economic growth.

The services sector saw a notable rise in credit growth, accelerating to 12.5 per cent YoY. This was largely supported by robust lending in the wholesale trade sector, which grew 18.1 per cent, and the real estate sector, which expanded by 13.9 per cent. The steady rise in real estate credit reflects sustained housing demand across the country.

However, the aviation sector continued to struggle, with aviation credit growth remaining weak at just 0.9 per cent YoY.

The report also noted a slowdown in personal loan growth, which stood at 11.8 per cent YoY. The decline was mainly due to reduced demand for credit card and education loans.

On the other hand, vehicle loans showed signs of recovery, growing at 9.7 per cent YoY, supported by rising passenger vehicle sales. Meanwhile, housing credit moderated slightly but remained steady at 11 per cent YoY, indicating continued interest in home purchases.

Looking ahead, the RBI's recent decision to reduce risk weights for lending to non-banking financial companies (NBFCs) from April 2025 is expected to further support credit growth in the coming months.

With lending activity picking up, India's banking sector appears to be on a path to gradual recovery, driven by strong demand in key segments such as real estate, wholesale trade, and vehicle loans. However, challenges remain in sectors like aviation and education loans, which continue to witness slower credit offtake. (ANI)