UPDATE 1-Brazil bank lending growth accelerates in March
* Lending growth rises 1 pct in March from February
* Defaults stable at 4.8 pct
* Earmarked loans up 1.4 pct (Recasts to add details on borrowing costs, earmarked loans)
BRASILIA, April 29 (Reuters) - Lending growth in Brazil accelerated in March from the previous month, boosted by an increase in government-mandated loans for housing and other activities.
Outstanding loans in Brazil's banking system rose 1 percent in March from the prior month, the central bank said in a report on Tuesday.
The so-called earmarked loans, or credit aimed at investments and homebuilding in accordance with government mandates, rose 1.4 percent from February, while non-earmarked loans increased 0.67 percent.
Disbursements at Brazilian private-sector banks rose about 5.4 percent in the 12 months through March, compared with 21.2 percent at state-run lenders, the report added.
President Dilma Rousseff has used state banks to push down Brazil's credit costs, among the world's highest for a major economy, while fostering competition with private banks.