Context:
Crisil Ratings projects bank credit growth in FY26 to rise to 12–13%, up from 11–11.5% estimated for FY25. This represents an expected acceleration of 100–200 basis points year-on-year.
Key Growth Drivers
- Supportive Regulatory Measures: Recent policy decisions by financial regulators are likely to enhance liquidity and credit transmission.
- Tax Cuts and Boost to Consumption: Personal tax reliefs and fiscal measures are expected to increase disposable income, thereby driving retail credit.
- Softer Interest Rates: With interest rate softening likely in the upcoming quarters, borrowing costs are expected to decline, supporting both corporate and retail credit demand.
Sectoral Insight: Corporate Credit
- Corporate loan demand is expected to pick up momentum, especially from sectors benefitting from:
- Downstream infrastructure demand
- Government-led capex in transport, logistics, and urban infrastructure
- Robust order books in construction and allied industries
Implications for the Banking Sector
- Improved credit demand across retail and corporate segments could boost banks’ top-line growth.
- With asset quality indicators remaining stable, credit expansion is likely to be sustainable.
- Banks may focus more on term loans, MSME lending, and project finance as infrastructure activity gathers pace.
About CRISIL
CRISIL ratings are assessments of creditworthiness provided by CRISIL Ratings Limited, a leading credit rating agency in India. These ratings, which indicate the likelihood of an issuer or rated entity defaulting on its debt obligations, are crucial for investors and lenders to assess risk and make informed decisions.
Crisil’s projection underscores a positive shift in India’s credit cycle, supported by policy stimulus, economic tailwinds, and lower cost of funds. FY26 could mark a pivotal year for bank-led financing in India’s growth story.
