Non-food credit has grown 17.8% to over Rs 43.66 lakh crore in the 12 months to December 2, according to the Reserve Bank of India (RBI).
The offtake had stood at Rs 37.04 lakh crore during the 12 months to December 3, 2010.
This is the second consecutive fortnight when the annualised credit growth has stayed below 18%.
Experts said the slowdown in credit growth is on account of the high interest rate regime, which has been in place for over a year with a view to reining in high inflation.
RBI has raised key policy rates by 350 basis points through 13 hikes since March, 2010 to curb inflation, which has been above the 9% mark since December last year. The rate of price rise was 9.11% in November.
Meanwhile, deposits rose to over Rs 58.69 lakh crore as on December 2, as against Rs 49.89 lakh crore as of December 3, 2010. This is a growth of 17.6%.
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In its first quarterly monetary policy review for FY'12 in July, RBI had said that credit growth was likely to slow down as a result of its rate hikes.
It projected the growth to be around 17-18% this fiscal, as against the earlier estimation of 19%, while deposit growth had been pegged at 17%.
During FY11, bank credit offtake increased by 21.5%, while deposits grew by only 15.5%.
Indian industry has complained that the high interest rate regime has resulted in slowing down of investments and the industrial growth.
Economic growth slowed to a nine-quarter low of 6.9% in the July-September period. Besides, industrial growth entered the negative trajectory in October and contracted by 5.1%.