Notwithstanding the government’s credit-driven stimulus to help tide over the impact of COVID-19, bank credit growth hit a new low for the second year in a row in FY21 at 5.56 percent the lowest in 59 years, according to an analysis by SBI Research.

Credit off-take in FY21 at Rs 109.51 lakh crore was lower than FY20's when it had clocked a growth of 6.14 percent -- which was the lowest in as many as 58 years. It was way back in FY1962 when credit growth was lower than this at 5.38 percent. Only around Rs 3 lakh crore of the Rs 20 lakh crore stimulus amounting to 11 percent of GDP was actually used in fiscal stimulus to fight the impact of COVID19 as the remaining amount was through credit support with no impact on the fiscal numbers of the government.

According to the SBI Research report, FY08 had the best credit and deposit growth on record -- 22.4 percent growth in deposits and 22.3 percent jump in credit offtake.

In the next two years, it fell to around 17 percent but inched back to 21.5 percent in FY11. Since then, credit demand has been on a steep southward curve, hitting a 58- year low in FY20 and a still lower 59-year pit in FY21. The report said credit offtake was hit hard by the pandemic in the first half when the economy was almost closed, and saw some improvement in H2 registering a growth since November. "But despite this, overall credit growth has plunged to a 59-year low of 5.56 percent in FY21, compared to 6.14 percent in FY20," said the report.

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