Crisil's Projection: Bank Credit Growth to Surge by FY26

Crisil forecasts a rise in bank credit growth to 13% by FY26, supported by regulatory measures, tax cuts, and lower interest rates. Corporate credit growth will accelerate particularly through non-bank finance disbursements, while retail, small business, and agriculture loans will experience steady growth.

According to domestic rating agency Crisil, bank credit growth is set to climb to 13% by the fiscal year 2026, compared to 11% in FY25. This optimistic projection is bolstered by recent regulatory measures, an uptick in consumption driven by tax cuts, and softer interest rates, said Crisil.

Despite the buoyant credit growth outlook, Crisil cautioned that the pace of deposit growth warrants attention. The agency's Director Subha Sri Narayanan highlighted a projected growth in corporate credit, which forms 41% of bank books, estimated at 9-10% in FY26. The acceleration is attributed largely to increased disbursements to non-bank finance companies and downstream demand from infrastructure development.

Crisil also mentioned that ongoing tariff wars might temper corporate borrowing enthusiasm. Retail credit is set to rise, especially in mortgage loans, while loans to small businesses and agriculture are expected to maintain steady growth. An associate director emphasized that RBI's liquidity measures should further aid deposit growth, creating a favorable environment for credit expansion.

(With inputs from agencies.)