Bank credit growth in India to rise to 12-13 pc in FY26: Report

Mumbai, April 15 (IANS) Bank credit in India is expected to grow by 12-13 per cent in the current financial year, rising 100-200 basis points (bps) compared to the 11.0-11.5 per cent estimated for the previous fiscal, a new report said on Tuesday.

This improvement is likely to be driven by recent supportive regulatory steps, increased consumption following tax cuts, and a softer interest rate environment, according to a report by Crisil Ratings.

Crisil Ratings Director Subha Sri Narayanan said credit growth in the corporate sector -- which accounts for 41 per cent of total bank credit -- is likely to rise to 9-10 per cent in FY26, up from an estimated 8 per cent in FY25.

"This will be supported by improved lending to NBFCs. The ongoing infrastructure projects are likely to push credit demand in sectors like cement, steel, and aluminium, even as companies remain careful about taking on new debt due to some tariff-related uncertainties," she noted.

One of the key regulatory changes expected to boost credit growth is the Reserve Bank of India’s (RBI) decision to roll back the 25 percentage points increase in risk weights for loans to certain non-banking financial companies (NBFCs).

This change, effective from April 1, will improve the flow of credit to NBFCs, which had seen a sharp fall in bank lending in FY25.

In another relief, the RBI has postponed the rollout of stricter liquidity coverage ratio (LCR) norms by a year.

These norms, if implemented on time, could have reduced the LCRs of many banks by 10-30 percentage points.

With the delay, banks can use the funds to boost credit growth instead of parking them for regulatory requirements.

The report also pointed to additional tailwinds, such as the income tax reliefs announced in the Union Budget and an expected moderation in inflation, which could lift consumer spending.

Lower interest rates are expected to further support credit demand. The RBI has already cut the repo rate by 50 bps since February 2025, and another round of rate cuts is expected this fiscal, the report mentioned.

--IANS

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