India's Bank Credit Growth Forecasted at 12-13% for FY26: Report
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Synopsis
According to a new report, India's bank credit is expected to increase by 12-13% in the current financial year, bolstered by regulatory support and rising consumer demand.
Key Takeaways
- Bank credit in India projected to grow by 12-13%.
- Corporate sector credit growth to rise to 9-10%.
- Regulatory changes to enhance lending to NBFCs.
- Infrastructure projects to drive demand in key sectors.
- Lower interest rates expected to further stimulate credit.
Mumbai, April 15 (NationPress) Bank credit in India is projected to increase by 12-13 percent in the ongoing financial year, marking a rise of 100-200 basis points compared to the previous fiscal's estimate of 11.0-11.5 percent, as stated in a recent report released on Tuesday.
This surge is anticipated to be fueled by recent favorable regulatory measures, heightened consumption due to tax reductions, and a more accommodating interest rate landscape, according to the findings of Crisil Ratings.
Crisil Ratings Director Subha Sri Narayanan indicated that credit growth within the corporate sector — which constitutes 41 percent of total bank credit — is set to rise to 9-10 percent in FY26, up from an estimated 8 percent in FY25.
"This growth will be supported by enhanced lending to NBFCs. Ongoing infrastructure initiatives are likely to drive credit demand in industries such as cement, steel, and aluminium, although companies are cautious about incurring new debt due to certain tariff-related uncertainties," she remarked.
A significant regulatory adjustment anticipated to stimulate credit growth is the Reserve Bank of India’s (RBI) retraction of the 25 basis points increase in risk weights for loans directed at specific non-banking financial companies (NBFCs).
This modification, which takes effect from April 1, will enhance the credit flow to NBFCs, which experienced a drastic decline in bank lending during FY25.
Additionally, the RBI has delayed the introduction of more stringent liquidity coverage ratio (LCR) regulations by one year.
If implemented as scheduled, these regulations could have lowered the LCRs for numerous banks by 10-30 percentage points.
With this postponement, banks can allocate funds to amplify credit growth instead of setting them aside for regulatory compliance.
The report also highlighted other beneficial factors, such as the income tax reductions revealed in the Union Budget and an anticipated easing of inflation, which could bolster consumer spending.
Furthermore, lower interest rates are predicted to enhance credit demand. The RBI has already reduced the repo rate by 50 basis points since February 2025, with further rate cuts anticipated this fiscal year, the report noted.
