Raghuram Rajan’s statements about Economy Growth are proving right as more numbers are coming up underscoring the Reserve Bank of India. According to the latest data, consumer loans are playing an important role in boosting the economy of the country.
Consumer loans like home loans and credit card outstanding have increased by 16.6% as compared to the last year. This increase ensures credit growth at a double rate. In last year, the total growth in credit was 12.7%, and consumer loans were at 14.8%.
“A combination of reported salary hikes by firms and lower costs of borrowing might have made borrowers more confident of paying higher EMIs. If correct, a sustained increase in consumer demand will catalyze a gradual pickup in investment,” said Saugata Bhattacharya, chief India economist at Axis Bank.
On Thursday, Rajan said he observed some rise in capital investment. “There is a continuing need, which the government is trying to address, of putting some of the stalled projects back on track,” said the governor in Chennai.
In the banking sector, the loan segment has seen growth over previous periods. RBI has cut its Repo Rate and boosted other banks to slash their lending rates. It is the rate at which RBI lends to the banks.
Following RBI cut, most banks have trimmed their rates also.
Home loans have increased by more than 17% as compared to the last May. The use of credit cards has also picked up. Customers are swiping their cards to buy smartphones and other gadgets. This ensures good credit growth and economic growth.
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