Crisil sees bank credit growth inching up to 13% in FY26

Domestic rating agency Crisil on Tuesday estimated bank credit growth will accelerate to up to 13 per cent in FY26 from 11 per cent in FY25. The credit growth will be on the back of supportive regulatory measures undertaken recently, a boost to consumption from tax cuts and softer interest rates, the agency said.

However, the rating agency added that the rate of deposit growth "bears watching".

The agency's Director Subha Sri Narayanan said corporate credit, which accounts for 41 per cent of the bank books, is likely to grow at 9-10 per cent in FY26, as against 8 per cent in the year-ago period. She further said that this acceleration will be primarily on higher disbursements to non-bank finance companies.

Downstream demand from the ongoing infrastructure buildout will also help corporate credit growth, the agency said, adding that this will come from the cement, steel and aluminium sectors.

It said the ongoing tariff wars will make companies cautious about borrowings.

Retail credit, which accounts for nearly a third of the overall loans in the system, will grow at 13-14 per cent in FY26, up from 12 per cent, it said, adding that this will be supported by improved affordability in a lower interest rate regime in the largest segment of mortgage loans.

Small businesses and agriculture loans are likely to witness steady growth at 16-17 per cent and 11-12 per cent, respectively, it said.

The agency expects RBI's measures on liquidity to help banks on the deposit growth in the new fiscal.

"While deposit growth has been constrained by tight systemic liquidity, the end of March 2025 saw liquidity turning to surplus and has remained so in April. With the RBI assuring adequate liquidity, the scenario should be more benign going ahead. This should support deposit growth and, in turn, credit growth," its associate director Vani Ojasvi said.