Reserve Bank of India (RBI) governor Shaktikanta Das announced a series of measures on Friday to encourage banks to lend. This comes after non-food credit growth fell to a 26-year low in 2019-20.
Will RBI’s new moves encourage banks to lend more? Mint takes a look. Click here to enlarge graphic How did non-food credit fare in 2019-20? Non-food credit grew 6.1% in 2019-20, the lowest since 1993-94, when it was 5.7% (see Chart 1).
It’s also the third-slowest growth in the last 60 years. The slowest growth was 5.4% and it took place in 1961-62. Banks lend money to the Food Corporation of India and other state procurement agencies to buy rice and wheat directly from farmers, primarily to meet the country’s food security needs.