PSBs back on growth path as India's economic recovery gains traction

While the impetus to double-digit credit growth was from wholesale lending, retail credit growth continued to be robust

As economic recovery gains traction, loan demand from banks started improving from the second half of the 2021-22 with credit hitting 13 per cent in June.

According to the Reserve Bank of India’s Financial Stability Report (FSR), public sector banks recorded growth in industrial credit after almost three years of contraction.

A significant portion of new industrial loans was extended as working capital loans. Loan growth to the private corporate sector turned positive after two successive years of decline and deleveraging.

“Rapid credit expansion during the second half of 2021-22 was aided by new loan accounts in the industrial and