Shifting Credit Dynamics: Rural and Semi-Urban Branches on the Rise

The Reserve Bank announced a noticeable decline in the credit share of metropolitan bank branches, with figures dropping to 58.7% by March 2025. The report attributes this to faster credit growth witnessed in rural, semi-urban, and urban branches.

While metro areas have been maintaining a dominant share in deposits, recording an 11.7% annual growth in March 2025, rural and semi-urban centers are not far behind. These areas are registering annual growth rates of 10.1%, 8.9%, and 9.3% respectively.

Despite robust growth in deposits, overall bank credit growth decelerated significantly to 11.1% in FY25, down from 15.3% the previous year. A parallel deceleration in deposit growth also occurred, decreasing from 13% to 10.6%. The data highlights changes in deposit patterns, where higher term deposit rates lead to a decrease in savings deposits' share.

(With inputs from agencies.)