Bank Credit Rises Over 7 Per Cent In FY26 Led By Retail Lending

New Delhi, Jan 6: Bank credit growth in India remained resilient, as gross banking credit (GBC) rose 7 per cent to Rs 1,95,273 billion in eight months of FY26 till November-end, driven mainly by retail loans, a report said on Tuesday.

Secured retail lending gains share

The report from Crisil Intelligence said secured retail lending — notably housing and gold loans — accounted for a larger share of incremental credit. It said retail credit accounted for about one-third of gross banking credit.

Unsecured loan growth moderates

Unsecured loan growth moderated after the Reserve Bank of India’s risk weight circular and tighter underwriting practices, it said.

MSME lending sees sharp rise

“Incremental credit to Micro, Small, and Medium Enterprises (MSMEs) doubled, supported by public sector banks (PSBs), whose asset quality and overall share in outstanding credit improved,” the report noted.

PSBs boost MSME credit share

The share of incremental credit towards MSME loans increased to 32.5 per cent from 17.7 per cent a year earlier, and the proportion of MSMEs in outstanding credit increased by 174 basis points, led by robust disbursements from public sector banks.

Rural demand supports PSB growth

PSBs also led credit growth in rural and semi-urban areas, reflecting an uptick in rural demand.

Industrial loans remain subdued

The research firm said high-ticket industrial loans contracted, indicating subdued capital expenditure, while working capital demand remained steady and credit to non-bank finance companies showed signs of revival after a regulatory slowdown.

Asset quality improves

Further, it said that PSBs’ asset quality improved, with gross non-performing assets decreasing to 2.5 per cent in September 2025 from 2.8 per cent in March 2025.

Outlook remains positive

A recent report from SBI Mutual Fund said that bank credit growth is projected at 13–14 per cent in FY27. Bank credit rose from 9 per cent in May to 11.4 per cent by November 2025, with aggregate credit likely to grow by 10.5–11 per cent in FY26.

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Household credit to outpace corporate

Household credit is expected to outpace corporate, the fund house said, adding that segments reliant on credit-driven demand and premiumisation trends should outperform in the near term.

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