The good GDP figures in the second quarter of the fiscal have increased the probability of credit demand pick up in fourth quarter. Bankers and economists are of the opinion that the reserve Bank of India should continue with its accommodative policy to support growth.

A liberal monetary policy could help banks to meet the 18 percent growth target set by the central bank in its quarterly policy review in October. Banks are witnessing a revival in demand from infrastructure, automobile and housing sectors.

RBI has projected that the manufacturing sector will increase its production to meet the rising demand which in turn would lead to an increase in the demand for bank credit.

According to Mr. Rajesh Mokashi, Deputy Managing Director, CARE, the current credit offtake of 15 percent should pick up and reach RBI's projection of 18 percent.

With the increase in private consumption, there will be an increase in credit demand. Mr. Dharmakirti Joshi, Director and Principal economist, Crisil pointed out that private consumption in the current quarter was 5.6 percent as against 1.6 percent in the preceding quarter.

An official from a leading public sector bank said, "We have seen good credit appetite in the last two weeks. Our bank sanctioned a number of project proposals from the power, cement, steel and hospitality sectors. However, when it comes to disbursements, we are keeping our fingers crossed. To support growth, the central bank's monetary policy stance should continue to be accommodative till the end of the current financial year."

A research report by Barclays indicated that credit growth was likely to pick up in the second half of the fiscal. Typically there was a lag of one to two months for the credit growth to match with the GDP growth. The report said, "Indeed, while credit growth has remained muted, the risks of a faster turnaround in credit are likely to weigh on the RBI's mind."