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Growth in Bank Lending:
Dangerous Trends

High rate of growth in bank lending and improved profitability of banks are being cited as signs of good health of the Indian economy. However, the fact that credit growth is driven by loans for consumption, rather than loans for production, is not a healthy sign. It is a dangerous trend. Moreover, the improved profitability of banks has been achieved at a very high public cost, including massive government spending to finance waiver of loans owed by capitalist defaulters, and charging much higher interest on consumer credit than the interest paid on deposits.

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