Mumbai (Maharashtra) [India], May 5 : The domestic banking sector recorded strong credit growth in FY26, with non-food credit (NFC) rising 15.9 per cent year-on-year, supported by broad-based growth across key segments, according to a report by ICICI Bank.
The report noted that outstanding non-food credit stood at around Rs 213 trillion as of March 31, 2026, with growth accelerating to above 16 per cent YoY.
Non-food credit is basically all the money banks lend to everyone except for the government's food procurement agencies. Think of it as the everyday credit that keeps the economy moving. It is divided into four main areas including, Personal Loans, Business/Industrial Loans, Agriculture Loans, and Services loans.
The report mentioned that retail lending remained a key driver, with growth improving to 16.2 per cent YoY. This was largely led by a sharp rise in gold loans, which grew 123 per cent YoY.
Home loan growth was relatively steady at 11.5 per cent YoY, while retail growth excluding gold loans was lower at around 12 per cent.
Other personal loans also saw improvement, growing 13 per cent YoY, although credit card growth remained muted at 3.5 per cent YoY, indicating some moderation in unsecured lending segments.
Among other sectors, lending to non-banking financial companies (NBFCs) saw strong momentum, growing 26 per cent YoY, while credit to commercial real estate (CRE) rose 18 per cent YoY. Industry credit also improved, recording a growth of 15 per cent YoY.
The report highlighted that a significant portion of the overall credit growth acceleration is being driven by large industry, which has reached a multi-month high of 9 per cent YoY, along with NBFCs. However, it cautioned that this trend may be net interest margin (NIM) dilutive for banks.
The report also flagged that geopolitical risks remain an important factor to monitor, as they could have implications for future credit growth and asset quality.
At the same time, it pointed out a technical aspect in the data reporting. The Reserve Bank of India (RBI) has changed its reporting format from alternate Fridays to mid-month and month-end reporting. The current data compares March 31, 2026 with April 4, 2025, which may lead to a slight overstatement in growth figures.
This is because banking activity typically peaks in the last one to two business days of a reporting period, which can inflate the reported numbers.
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