Non-food credit extended by scheduled commercial banks (SCBs) recorded an average annual growth of 26.1 per cent between 2002-03 and 2005-06, notably higher than that of 14.5 per cent recorded during the preceding four-year period (1998-99 to 2001-02) as well as the longrun average of 17.8 per cent (1970-2006).
The stagnation in credit flow observed during the late 1990s, in retrospect, was partly caused by reduction in demand on account of increase in real interest rates, turn down in the business cycle, and the significant business restructuring that occurred during that period.