How Did Scheduled Commercial Banks' Credit Offtake Increase by 9.9% in Q1 FY26?
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Synopsis
Scheduled Commercial Banks (SCBs) saw a remarkable 9.9% increase in credit offtake during the first quarter of FY26. This growth is largely attributed to sectors like housing and MSMEs, with public sector banks leading the charge. Join us as we explore the factors driving this momentum and its implications on the economy.
Key Takeaways
- Credit offtake increased by 9.9% YoY in Q1 FY26.
- Housing, gold loans, and vehicle finance were the primary growth sectors.
- PSBs outperformed PVBs in lending momentum.
- MSME sector grew at 19.3% in the same period.
- Deposits grew at a faster rate than credit, at 10.9% YoY.
New Delhi, Sep 11 (NationPress) The credit offtake from Scheduled Commercial Banks (SCBs) experienced an annual increase of 9.9 percent in the initial quarter of the financial year (Q1 FY26), according to a report released on Thursday.
This growth was primarily fueled by significant rises in the housing, gold loans, and vehicle finance sectors, as reported by Care Edge Ratings.
Additionally, the upward trend was bolstered by a 19.3 percent growth in the MSME sector during Q1 FY26, although this was somewhat counterbalanced by a slowdown in agriculture (6.8 percent), industry (5.5 percent), and services (9.6 percent).
The credit offtake from public sector banks (PSBs) has consistently surpassed that of private sector banks (PVBs) for the last three quarters. This trend is attributed to PSBs having more capacity for lending, supported by stable credit-to-deposit (CD) ratios compared to their PVB counterparts, as indicated in the report.
The northeastern region showed remarkable performance with an annual growth rate of 13.7 percent, while the rural segment exhibited the fastest growth among all regions at 12.8 percent.
In June, the total credit outstanding climbed to Rs 33.1 lakh crore within the 7-8 percent interest rate category, up from Rs 20 lakh crore in the same month of the previous year.
Lower interest brackets (below 6 percent) increased to Rs 18.3 lakh crore from Rs 5.3 lakh crore, while higher yield segments (above 11 percent) fell to Rs 27 lakh crore from Rs 30.3 lakh crore. This indicates a shift by banks towards mid-yield loans and a reduction in high-interest lending exposure.
The report also highlighted that deposits grew at a faster rate compared to credit, achieving a 10.9 percent year-on-year increase, driven by enhanced mobilization efforts from private banks and competitive rates on select deposit products. In absolute numbers, deposits grew by Rs 22.6 lakh crore since June 2025.
The Credit to Deposit (CD) ratio fell by 78 basis points by the end of June 2025, settling at 79.6 percent, down from 80.4 percent a year earlier, reflecting a trend where deposit growth has outstripped credit offtake.
Moreover, the disparity between deposit and credit growth has decreased compared to the previous year, aided by improved liquidity conditions following RBI's interest rate cuts, according to the report.
Point of View
I believe that the recent rise in credit offtake by Scheduled Commercial Banks signals a positive trend for the economy. The data reflects not only growth in key sectors but also a competitive banking environment, particularly among public sector banks. This provides a hopeful outlook for businesses and consumers alike, fostering a climate of investment and financial engagement.
NationPress
13/09/2025
Frequently Asked Questions
What is credit offtake?
Credit offtake refers to the total amount of loans disbursed by banks during a specific period. It indicates the level of borrowing and lending activity in the economy.
Which sectors contributed to the rise in credit offtake?
The rise in credit offtake was largely driven by the housing, gold loans, vehicle finance, and MSME sectors.
How did public sector banks perform compared to private sector banks?
Public sector banks consistently outperformed private sector banks in credit offtake over the last three quarters, benefiting from stable credit-to-deposit ratios.
What was the growth rate of the MSME sector?
The MSME sector experienced a significant growth rate of 19.3% in Q1 FY26.
What does the decline in the Credit to Deposit ratio signify?
The decline in the Credit to Deposit ratio indicates that deposit growth is outpacing credit growth, reflecting a stronger mobilization of deposits in the banking sector.
