Low credit growth, high GDP suggest decoupling: SBI

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The State Bank of India (SBI) said a steep decline in credit growth, which hit a multi-decadal low in 2016-17 despite the economy clipping at around 7 per cent, suggests decoupling of credit growth and GDP.

Loan growth plummeted to a whopping six decadal low of 5.08 per cent in fiscal 2017, against 10.7 per cent a year ago, according to the Reserve Bank of India (RBI) data. This was the lowest since 1953-54, when credit demand recorded only 1.7 per cent growth.

"Earlier the math was very clear: if GDP grows at 7 per cent credit growth should be at 14-15 per cent. But now it seems a decoupling of the two has happened. There is no relationship between GDP and credit growth now," SBI managing director Rajnish Kumar told reporters in Mumbai on Monday.
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