Bangalore: Credit growth in the banking sector registered 26 percent over the last 12 months due to better uptake by corporates and institutions, Reserve Bank of India (RBI) Deputy Governor V. Leeladhar told reporters here Tuesday.

"The growth of advances is far better than what it was last year. We have seen credit offtake from July 2007 to June 2008 increasing by 26 percent against 20 percent year-on-year (YoY) in 2006-07," Leeladhar said on the sidelines of a State Bank of India (SBI) function.

Though consumer credit, including retail lending, witnessed slowdown in the first quarter of this fiscal (2008-09), farm loans are expected to take off in the ensuing months.

On the banking sector reforms, the deputy governor said measures to allow foreign firms to buy local banks were on track and would be unveiled next fiscal.

"It will depend on the half-yearly review by March next. The further opening up will be based on the review findings," Leeladhar pointed out.

Asked if higher interest rates and squeezing liquidity from the market were hurting credit offtake, the deputy governor said there was no slack in demand for advances.

"Higher interest rates may somewhat slow down credit growth though it is too early to estimate by what percentage," he noted.

SBI chairman and managing director O.P. Bhatt also told reporters that credit growth was much better this year than last year, but declined to elaborate.