In his August 6 bimonthly review of monetary policy, Reserve Bank of India Governor Sanjay Malhotra underlined the steady flow of resources to the commercial sector despite a recent slowing in bank credit growth. He pointed out that higher flows from non-bank sources, both domestic and external, more than compensated for reduced flows from banks. As a result, total resources to the commercial sector rose by ₹900 billion to about ₹35 trillion in the year ended March 2025, a trend that appears to have extended into the current year.Malhotra also emphasised that bank credit growth of 12.1% in 2024-25 exceeded the decadal average of 10.3%. The shift to single-digit credit growth in the early months of 2025-26, he suggested, is not alarming since overall financing for the commercial sector remains intact. That holistic view is valid in aggregate terms, yet the real issue lies beneath the headline numbers. The pattern of credit allocation is shifting in ways that merit closer scrutiny.
.png)
