Glossarytaught in M7.07, M5.01
Credit growth
Also called bank credit growth, loan growth.
The rate at which bank lending is expanding, reported fortnightly in India and closely watched.
A system whose loans grew from ₹36,000 crore to ₹42,000 crore expanded 16.7%.
It's one of the most useful real-time indicators of the economy, because lending both reflects demand and creates it. Credit growth running far above deposit growth for several quarters produces a funding constraint that eventually slows lending regardless of demand.
Sustained credit growth well above nominal economic growth has historically ended badly, in every market that has tried it.
Compare credit growth to nominal output growth. The gap between them is the story.
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