Metropolitan bank branches lose ground in credit, falls to 58.7% from 63.5% in five years: RBI

NEW DELHI: Bank branches in metropolitan areas have seen their share in overall credit decline to 58.7 per cent as of March 2025, down from 63.5 per cent five years ago, according to the Reserve Bank of India’s (RBI) latest report.

The central bank attributed this shift to faster credit growth in non-metro regions. “With higher credit growth in rural, semi-urban and urban areas compared to metropolitan area, the share of metropolitan branches in total credit declined to 58.7 per cent in March 2025 from 63.5 per cent five years ago,” the report stated.

Despite the drop in credit share, metropolitan branches continued to lead in deposit mobilisation, registering an annual growth of 11.7 per cent in March 2025. In comparison, rural, semi-urban, and urban centres posted growth rates of 10.1 per cent, 8.9 per cent, and 9.3 per cent, respectively.

Overall, bank credit growth moderated to 11.1 per cent in FY25, down from 15.3 per cent in FY24. Deposit growth also slowed to 10.6 per cent from 13 per cent during the same period.

The report also noted a shift in deposit composition due to rising term deposit rates, with the share of savings deposits dropping to 29.1 per cent from 30.8 per cent a year ago, and from 33 per cent two years ago.

Credit growth declined across all categories of banks in FY25. Private sector banks recorded the sharpest drop, with growth falling to 9.5 per cent after maintaining levels above 15 per cent for three consecutive years.

Personal loan growth- including housing, education, vehicle, credit card, and consumer durable segments- also slowed markedly to 13.2 per cent. However, this category's share in overall credit reached 31 per cent. Loans for consumer durables and other personal purposes made up roughly one-third of total personal credit. Loans carrying interest rates above 11 per cent accounted for 47.4 per cent of total lending in this segment, down from 50.3 per cent a year earlier.

Industrial credit, which forms about one-fourth of total bank lending, grew at 9.4 per cent in FY25, compared to 10.4 per cent in FY24.

On the deposit side, women’s share remained stable at 20.7 per cent, while senior citizens continued to hold over one-fifth of total deposits. Meanwhile, term deposits exceeding Rs 1 crore rose to 45.1 per cent in March 2025 from 43.7 per cent in March 2024.