Apr 17 (BNP): Bank lending in India picked up strong momentum in FY26, with credit expanding by 16.08% year-on-year, marking its fastest growth since FY24, when growth had crossed 20%, according to Reserve Bank of India (RBI) data.
Deposits also showed healthy traction, rising 13.47% YoY—its strongest pace in the same period. Total bank credit stood at ₹213.61 trillion, while deposits reached ₹262.30 trillion.
In the fortnight ended March 31, credit rose sharply by 2.8% (₹5.92 trillion), compared with a marginal 0.1% increase in the previous fortnight. Deposits grew even faster during the same period, up 4.87% (₹12.18 trillion). However, analysts noted that year-end figures may appear elevated due to changes in RBI reporting dates.
Market experts said credit growth has improved in recent months, led by strong demand from corporates, MSMEs, and retail borrowers, particularly in segments like gold loans. Lower lending rates have also encouraged companies to shift back to bank borrowing, as bond market yields remained relatively high.
According to industry experts, external funding avenues such as overseas borrowing have become costlier due to elevated global yields and currency volatility, further boosting reliance on domestic bank credit.
Data shows major lenders including State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank have reported strong growth across corporate and MSME loan segments.
Analysts also pointed out that bond market activity has remained subdued due to higher yields, while tighter global financial conditions have constrained external commercial borrowing. This has further strengthened banks’ role as key lenders in the system.
However, experts cautioned that sustaining this pace of credit growth will require stronger deposit mobilisation, as rising credit demand is already creating pressure on liquidity and balance sheets. Banks have increasingly relied on certificate of deposits (CDs) to bridge funding gaps, with issuances rising sharply during FY26.
Overall, while credit momentum remains strong, analysts expect banks to focus on deposit growth and funding stability to support sustained lending expansion going forward.
