Record Loans Confound Subbarao as Rates Increase: India Credit
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The Reserve Bank of India’s five interest-rate increases this year are failing to stem a surge in credit, showing the challenges Governor Duvvuri Subbarao faces in keeping inflation in check as the economy expands.
Loans to companies including Essar Steel Ltd. and Videocon Industries Ltd. climbed 36 percent to 2.1 trillion rupees ($45 billion) this year, the most since Bloomberg started compiling the data in 2002. State Bank of India and ICICI Bank Ltd., the nation’s two biggest, have raised their lending rates by 50 basis points since March, less than half the 1.25 percentage-point increase in the central bank’s benchmark repurchase rate.