Indian banks post strongest credit growth in over 4 years
India's banks just saw their biggest credit growth in more than four years, jumping 20% year-on-year for the June 2026 quarter, and the momentum kept going into July.
The boost was led by industrial and services lending, with large corporate borrowings and higher funding demand from NBFCs also among the key drivers.
Loan growth in India outpaces deposits
Loans to micro, small, and medium enterprises (MSMEs) stayed strong too, with system credit growth at about 18% after adjusting for recent reporting changes.
Interestingly, loan growth has outpaced deposit growth lately, pushing the loan-to-deposit ratio close to decade highs.
Bernstein expects loan growth to settle at 13-15% in FY27 and says banks should keep stable profits thanks to good asset quality, even though tighter policies later this year might slow things down a bit.