Banks Register 15.9% Credit Growth in FY26 as Demand Surges Across Agriculture, MSMEs and Personal Loans
Bank credit touches ₹212.9 lakh crore; services sector lending rises 19%, while industrial credit nearly doubles from previous year’s pace
The government attributed the broad-based credit expansion to a low-interest-rate environment, sustained public capital expenditure, structural reforms and rising private investment activity.
New Delhi: Scheduled commercial banks (SCBs) recorded robust non-food credit growth of 15.9% in FY 2025-26, reflecting strong economic activity, rising domestic demand and improved lending momentum across sectors, according to data released by the finance ministry on Tuesday.
Aggregate credit outstanding reached ₹212.9 lakh crore in March 2026, an increase of ₹29.2 lakh crore over the previous year. The year-on-year growth marks an improvement of 497 basis points over the 10.9% growth recorded in the corresponding period of FY25.
The government attributed the broad-based credit expansion to a low-interest-rate environment, sustained public capital expenditure, structural reforms and rising private investment activity.
Credit growth during FY26 was led by the services sector, followed by personal loans, agriculture and allied activities, and industry.
Credit deployment to agriculture and allied activities accelerated to 15.7% during FY26, compared with 10.4% growth in the previous year. The government said sustained rural demand and increasing formalisation of rural credit contributed to the stronger momentum in farm sector lending.
Industrial credit growth nearly doubled to 15% from 8.2% a year earlier, supported mainly by strong lending to micro, small and medium enterprises (MSMEs). Credit to micro and small industries grew 33.1% year-on-year, while medium industries registered 21.7% growth.
Key sectors driving industrial credit included infrastructure, basic metals and metal products, chemicals and chemical products, petroleum, coal products and nuclear fuels.
The services sector, which accounts for nearly 28% of total bank credit, recorded 19% growth in FY26, compared with 12% in the previous year. The increase was driven primarily by higher demand from non-banking financial companies (NBFCs), trade and commercial real estate.
Personal loans, accounting for around 33% of total credit, expanded by 16.2% during the year against 11.7% growth in FY25. The government said housing loans remained stable, while vehicle loans and loans against gold jewellery witnessed strong demand.
According to the finance ministry, the sustained growth in credit reflects resilient domestic economic conditions and growing confidence among both corporate and retail borrowers.
The ministry noted that higher credit offtake supports business expansion, investment in fixed assets, industrial capacity creation and employment generation.
It also highlighted that the Indian banking sector remains well-capitalised with historically low impaired assets and sustained profitability, enabling banks to support economic growth despite global geopolitical and geo-economic uncertainties.
The year-on-year growth has been calculated using credit data as on April 4, 2025 against March 31, 2026, following changes introduced under the Banking Laws (Amendment) Act 2025 relating to reporting fortnight definitions.
