Not in favour of runaway credit growth: RBI governor

RBI comfortable with the current credit growth pace, roughly in line with GDP

- Anshika Kayastha

The Reserve Bank of India is not in favour of credit growth running ahead of economic fundamentals and is comfortable with the current pace, roughly in line with GDP, even as the central bank does not set explicit targets for either credit expansion or economic growth, Governor Sanjay Malhotra said.

“Last 10 years, it's (credit growth) been more or less 1x (the GDP growth) and we have done well,” Malhotra said at a post policy meet on Friday, adding that the real growth rate is about 7%.

“When one talks about 2x growth, those are the times before 2011-12. Earlier, we used to have very high credit growth rates and you did see what impact it had on bank asset quality. So, I don't think 2x is the kind of number that we are looking at,” he said.

The growth rate hinges on the structure of the economy, Malhotra said, adding that the Monetary Policy Committee (MPC) or the central bank can’t accelerate or decelerate the growth rate of the economy and credit.