New Delhi [India], January 2 : India's banking sector has remained resilient, underpinned by calibrated risk management and improving asset quality, with overall credit offtake expected to strengthen in the near term as interest rates soften, GST rationalisation progresses, and festive demand continues, according to a report by Bank of Baroda.
The report, authored by economist Jahnavi Prabhakar, attributed the positive outlook to supportive liquidity enhancement measures by the Reserve Bank of India, which are expected to enable banks to step up lending.
The Bank of Baroda report put out on Friday asserted that overall bank credit growth accelerated to 11.5 per cent in November 2025 from 10.6 per cent a year earlier, with outstanding bank credit rising to Rs 195 lakh crore compared with Rs 175 lakh crore in November 2024.
Non-food credit also strengthened, growing by 11.4 per cent year-on-year, broadly reflecting steady momentum across sectors.
Sectoral trends, however, were uneven. Credit growth to agriculture moderated sharply to 8.7 per cent in November 2025 from 15.3 per cent a year earlier, while credit to industry improved to 9.6 per cent from 8.3 per cent
Within industry, micro and small enterprises emerged as a key driver, recording a robust 24.6 per cent growth compared with 10.2 per cent last year, aided by higher lending from public sector banks. Medium industries saw credit growth of 15.7 per cent, while large industries lagged at 4.6 per cent
The services sector reported credit growth of 12.8 per cent, marginally higher than 11.7 per cent in the previous year, with trade credit remaining strong at 14.2 per cent. Lending to non-banking financial companies rose by 9.5 per cent, reflecting healthy demand for funds in the shadow banking space
Personal loan growth moderated to 12.8 per cent from 13.4 per cent a year earlier, influenced by regulatory measures introduced by the RBI. Within this segment, vehicle loans recorded an improvement, growing by 12.4 per cent, in line with stronger vehicle sales. In contrast, credit card outstanding growth slowed sharply to 2.4 per cent, while housing and other personal loans remained subdued due to tighter capital norms
At an industry level, credit growth aligned closely with real sector performance. Mining, electronics, engineering, vehicles, and gems and jewellery recorded strong double-digit growth, mirroring improvements in output and exports, the report noted
Overall, the report concluded that improving macro conditions and supportive policy measures should help sustain credit momentum in the coming months.
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