Mumbai – Bolstered by recent Goods and Services Tax (GST) reforms and a significant uptick in demand during the ongoing festive season, bank credit in India experienced a robust surge of 11.38 percent in the fortnight ending October 3, 2025. This represents the most rapid growth in over eight months, according to data released by the Reserve Bank of India (RBI).
During the reporting period, banks disbursed loans totaling Rs 192.66 lakh crore, a substantial increase compared to the Rs 172.98 lakh crore disbursed in the corresponding fortnight ending October 4, 2024. The last time bank credit growth exceeded this level was in the fortnight ending January 24, 2025, when it registered 11.41 percent. On a fortnightly basis, bank advances witnessed an increase of 1.92 percent.
The government’s decision to rationalize the GST structure, effective September 22, played a pivotal role in this growth. The reform abolished the previous multiple GST rates of 5 percent, 12 percent, 18 percent, and 28 percent, replacing them with a simplified two-slab structure of 5 percent and 18 percent. This move has been credited with stimulating domestic demand during the crucial festive season, particularly amidst ongoing uncertainties related to US tariffs.
According to a recent report by the Bank of Baroda, “There has been pent-up demand. A lot of spending was held back in the early part of September since the new structure of GST was to be applicable from 22nd of the month.”
The report further highlighted the positive impact of declining inflation on real disposable income. Consumer Price Index (CPI) inflation fell to an eight-year low of 1.54 percent in September, down from 2.07 percent in August.
“Income tax relief given in the Budget should also help to prop up spending. While such benefits accrue over the year, savings in tax in the first six months should provide a boost in spending in the second half,” the Bank of Baroda report stated.
Furthermore, the RBI data revealed that bank deposits also experienced significant growth, rising by 9.94 percent to reach Rs 240.98 lakh crore in the reported fortnight, compared to Rs 219.2 lakh crore in the fortnight ending October 4, 2024.
