The softer interest rate regime and boom in housing, retail and infrastructure sectors boosted credit of banks by Rs 1,19,684 crore (Rs 1,196.84 billion) last fiscal.

In his update of the economy a month before the slack season Credit Policy for 2004-05, Reserve Bank of India Governor Y V Reddy said, "Credit expansion in 2003-04 appears to have been led by the housing and retail sectors."

"Bank credit for housing increased by 33 per cent, while that for infrastructure by 25 per cent," he said at a book release function in New Delhi on Wednesday.

Although credit growth to industry was slack in the first five months of the last fiscal, he said: "Credit expansion in the subsequent months has been quite vigorous. As a result, Rs
1,19,684 crore incremental credit has been made available in 2003-04 as against Rs 99,448 crore (Rs 994.48 billion) in 2002-03."

Non-food credit or loans to industrial sector grew by 17.6 per cent last fiscal, which was slightly lower than 18.6 per cent in 2002-03, he said, adding it was in line with RBI's expectations set out in April 2003.

Loans to priority sector comprising agriculture, export and small scale industries, grew by 16 per cent in the first 10 months of the last fiscal.

Aggregate deposits of banks grew by almost 17.3 per cent last fiscal.

Growth in credit comes in the wake of RBI's policy of maintaining soft interest regime in the last few years.

Moreover, lending rates of banks fell by 0.25-1.0 per cent after the implementation of benchmark prime lending rate, Reddy said.