New Delhi, Sep 15 (NationPress) A recent report indicates that bank credit in India is projected to increase by 11–12 percent during the second half of the ongoing financial year (FY26). This growth rate is anticipated to be slightly higher than the previous fiscal year and surpasses the average growth observed over the last decade, as outlined by Crisil Ratings.

The report highlights that this growth will primarily occur in the latter half of the year, driven by government and regulatory support alongside a resurgence in consumption.

Retail credit is expected to spearhead this growth, with an estimated expansion of approximately 13 percent this fiscal, compared to 11.7 percent in the previous year.

Within the retail lending sector, unsecured loans are anticipated to experience rapid growth, buoyed by increasing consumer demand and a low base effect from the past year.

Home loans, which constitute more than half of retail credit, will gain from lower interest rates, while gold loans, albeit smaller in proportion, are set to continue their robust growth trajectory.

According to Crisil Ratings’ Chief Ratings Officer, Krishnan Sitaraman, factors such as a reduction in GST, decreasing interest rates, stable inflation, and income tax reductions announced in the Union Budget will collectively enhance consumption and stimulate retail credit demand.

Ajit Velonie, Senior Director at Crisil Ratings, pointed out that banks represent around 40 percent of the Rs 171 lakh crore corporate credit market, while capital markets account for over a third.

The trend of substituting bank loans with bonds may decelerate once bank lending rates fully mirror the repo rate cuts.

Furthermore, lending to non-banking financial companies (NBFCs) is projected to rise in the second half, following the easing of higher risk weights on bank exposure to this sector.

Infrastructure-driven demand is likely to boost credit to industries such as cement, steel, and aluminium.

Credit for micro, small, and medium enterprises (MSMEs), which represent about 17 percent of total bank credit, is expected to remain stable at around 14 percent.

Crisil stated that digitization, formalization, and enhanced data access have enabled banks to cater to this segment more effectively, although some export-oriented MSMEs may still encounter challenges.

Agricultural credit is forecasted to grow by approximately 10 percent this fiscal year, bolstered by favorable rainfall and promising harvest expectations.