The Reserve Bank of India (RBI) has released the performance of gross bank credit growth for the first month of the financial year 2017 -18 (FY18). As expected, gross bank credit stood at Rs 65,93,500 crore in April rising by just 4.3% compared to Rs 63,22,600 crore in the corresponding period of the previous year.

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In percentage terms, this growth is nearly half of what was recorded in April 2016 – where gross bank credit growth was at 8.6% as against the same month of last year. 

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Credit from personal loan indicators like consumer durables (Rs 17,100 crore), housing loans (Rs 8,16,000 crore, credit card outstanding (Rs 54,100 crore) and vehicle loans (Rs 1,64,500 crore) recorded yoy growth of 21.1%, 18%, 31.2% and 20.1% respectively. 

Simply put, within personal loans, credit cards saw highest growth of over 31% in the given month. 

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He believes three things will aid the performance of loan growth in FY18. 

First, waning credit substitution as banks effectively price as per the MCLR curve; second, continued growth momentum in retail, aided by declining product rates and a modicum of revival in corporate credit on higher inflationary expectations and lastly, improved utilisation of industrial capacity.

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He said, "We expect retail credit demand to be driven by home loans, given the increased affordability on falling product rates, favourable demographic drivers (nuclear families, internal migration) and government incentivisation (upfront interest subvention in affordable housing)."