Credit Growth Slows in June 2025: RBI Data

As the Reserve Bank of India (RBI) gears up for its Monetary Policy Committee (MPC) meeting scheduled between August 4 and 6, 2025, recent data reveals a slowdown in bank credit growth across key sectors. This development could play a pivotal role in shaping the central bank’s monetary stance amid mixed economic signals.

Industrial Credit Growth Slows to 5.5%

According to RBI data for the fortnight ended June 26, 2025, credit to the industrial sector grew by just 5.5% year-on-year, down from 7.7% during the same period last year. While overall growth softened, credit to micro, small, and medium enterprises (MSMEs) remained steady.

Among major industries, engineering, construction, and textiles registered robust year-on-year growth in outstanding credit.

Agricultural Lending Witnesses a Sharp Drop

Credit to agriculture and allied activities posted a y-o-y growth of 6.8%, sharply lower than the 17.4% recorded in the previous year. The slowdown in rural credit could affect input investments and rural demand, raising concerns for policymakers.

Services Sector Credit Also Cools

The services sector experienced a moderation in loan growth to 9.6%, compared to 15.1% last year. This was largely due to a slowdown in credit extended to NBFCs. However, segments such as computer software and professional services maintained healthy credit momentum.

Deceleration in Personal Loans

Growth in personal loans declined to 14.7% from 16.6% last year, mainly due to a dip in vehicle loans, credit card outstanding, and other personal loans.

Also Read:RBI Tightens AIF Investment Rules for Banks and NBFCs!

Conclusion

The broad-based deceleration in credit, with overall non-food credit growth slowing to 10.2%, adds a layer of complexity to the RBI’s upcoming MPC discussions. With the meeting set for August 4–6, market watchers will closely monitor how these trends influence the central bank’s decisions on interest rates and liquidity.

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