Bank Credit Surges 11.38% Amid GST Relief
In a remarkable development for India’s economy, bank credit has shown a significant surge of 11.38% in just 14 days ending October 3, 2025. This growth has been primarily driven by the recent reduction in the Goods and Services Tax (GST) and the increase in consumer demand during the festive season, according to data from the Reserve Bank of India (RBI).
During this fortnight, banks disbursed loans amounting to Rs 192.66 lakh crore, up from Rs 172.98 lakh crore in the previous year. This marks the fastest growth in bank credit seen in over eight months. The new GST structure, which came into effect on September 22, has simplified tax rates and spurred domestic demand, especially as consumers prepare for festivals.
The government’s decision to rationalize GST by eliminating multiple rates and introducing a two-slab system of 5% and 18% has prompted increased spending. Many consumers had postponed their purchases, waiting for the new GST rates to take effect, leading to what analysts describe as pent-up demand. "A lot of spending was held back in early September," noted a report from Bank of Baroda.
Moreover, inflation is trending downwards, with the Consumer Price Index (CPI) falling to an eight-year low of 1.54% in September, down from 2.07% in August. This decline in inflation is expected to increase disposable income for consumers, further encouraging spending as people feel more financially secure.
Additionally, the income tax relief announced in the Budget is anticipated to support increased spending as well. While these benefits will accumulate over time, tax savings in the first half of the fiscal year are likely to provide a boost for consumer spending in the second half.
Bank deposits have also seen growth, increasing by 9.94% to Rs 240.98 lakh crore during the reported fortnight, compared to Rs 219.2 lakh crore in the previous year. This combination of rising credit and deposits indicates a strengthening economy as consumers and businesses alike feel the impact of these favorable financial changes.
