Riding on the back of growing demand by the industrial sector, the Reserve Bank of India on Tuesday said non-food bank credit is expected to grow at 19 per cent as against earlier estimate of 16-16.5 per cent in the current fiscal.

Non-food bank credit, including investments in securities of public sector undertakings, private and corporate sectors, and commercial papers are expected to increase by around 19 per cent, the RBI said in mid-term review of its annual policy.

The higher credit expansion could be accommodated without putting undue pressure on money supply because of lower government borrowing from the banking sector, it said, adding that in the eventuality of government borrowings being larger, unwinding of Market Stabilisation Scheme would facilitate such borrowings.

• RBI keeps bank rate untouched at 6%
• Highlights of the Credit Policy

The last pick up in credit seen in the first half is likely to be sustained rest of the year, the RBI said.

It said scheduled commercial banks' credit up to October 2004 grew by 11.3 per cent at Rs 95,120 crore (Rs 951.20 billion) as against the 4 per cent a year ago.

Non-food credit posted a robust increase of 11.5 per cent (Rs 92,4443 crore) as compared with an increase of 6 per cent (Rs 41,034 crore) in the corresponding period of the previous fiscal.