New Delhi, Sep 15 Bank credit in India is expected to grow by 11–12 per cent in the second half of the current financial year (FY26), a new report said on Monday.
The growth will be slightly higher than last fiscal and also above the average growth seen in the past decade, according to Crisil Ratings.
The rating agency said the increase will mainly come in the second half of the year, helped by government and regulatory support and a pick-up in consumption.
Retail credit is expected to lead the growth and could expand by around 13 per cent this fiscal, compared to 11.7 per cent previous financial year.
Within retail lending, unsecured loans are likely to grow faster, supported by rising consumer demand and the low base of last year.
Home loans, which form more than half of retail credit, will benefit from lower interest rates, while gold loans, though smaller in share, are expected to continue their strong growth.
Crisil Ratings’ Chief Ratings Officer, Krishnan Sitaraman, said the reduction in GST, lower interest rates, benign inflation, and income tax cuts announced in the Union Budget will all support consumption and boost retail credit demand.
Ajit Velonie, Senior Director at Crisil Ratings, noted that while banks account for around 40 per cent of the Rs 171 lakh crore corporate credit market, capital markets contribute over a third.
The substitution trend toward bonds could slow once bank lending rates fully reflect repo rate cuts.
Lending to non-banking financial companies (NBFCs) is also expected to pick up in the second half, following the rollback of higher risk weights on bank exposure to the sector.
At the same time, infrastructure-led demand is likely to push credit to industries such as cement, steel, and aluminium.
Credit to micro, small, and medium enterprises (MSMEs), which make up about 17 per cent of overall bank credit, is expected to remain steady at around 14 per cent.
Crisil said digitisation, formalisation, and better data access have helped banks serve this segment more efficiently, though some export-oriented MSMEs could still face challenges.
Agricultural credit is projected to grow around 10 per cent this fiscal, supported by adequate rainfall and good harvest expectations.
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