RBI says rate-hike transmission may cool credit growth
In short
The RBI said higher loan rates may slow credit growth in the next few quarters.
Governor Malhotra also told banks to do proper due diligence and use FCNR(B) deposits carefully. The report does not give a number for the slowdown or say when it will show up.
What the reporting says
The RBI said rate-hike transmission is expected to temper credit growth in coming quarters, according to the reported remarks tied to Governor Malhotra. The same source says banks should do proper due diligence and use FCNR(B) deposits prudently. What is not stated is the size of the expected slowdown or any specific policy change.
Why it matters
The RBI indicated that the pass-through of past rate hikes may reduce credit growth over the coming quarters. In the same reported remarks, Governor Malhotra urged banks to do proper due diligence and use FCNR(B) deposits prudently. The message matters for lenders and borrowers because it points to a softer credit environment, but the reporting does not quantify the impact or specify a policy action.