New Delhi, March 26 India’s credit growth has seen a sharp jump in FY26, rising 61 per cent, driven mainly by strong demand from retail borrowers and MSMEs, a new report showed on Thursday.
Credit growth in India has accelerated significantly in FY26, with total credit flows rising to Rs 25.1 lakh crore, nearly matching deposit mobilisation of Rs 26.1 lakh crore, a report by Yes Bank said.
The report noted that strong demand across retail, MSME and infrastructure sectors has been the key driver of this growth.
However, deposit growth has been slowing since FY24, creating some pressure on liquidity in the banking system.
As a result, the credit-deposit (C/D) ratio has climbed to 82.4 per cent, its highest level in a decade.
Retail loans continue to dominate credit growth. Personal loans have seen their share rise from 29 per cent to 33 per cent in recent years, supported by tax relief measures and GST-related benefits that have boosted household incomes.
Within this segment, vehicle loans have emerged as the biggest driver, overtaking housing loans since the third quarter of FY26.
There is also a noticeable shift towards secured lending as growth in unsecured loans has slowed.
The report also highlighted a recovery in industrial credit, led by MSMEs. The segment now accounts for nearly one-third of total industrial credit and has seen strong growth due to government support, including credit guarantee schemes and revised MSME definitions.
Micro and small enterprises alone added Rs 2.38 lakh crore in loans during the year, while medium enterprises contributed Rs 63,000 crore, the report said.
Looking ahead, the report cautioned that credit growth may slow in FY27 due to several risks.
Higher oil prices, weaker exports and rising food inflation could impact economic activity and reduce demand for loans.
At the same time, the fading impact of GST benefits may also weigh on growth, the report stated.
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