The Union finance ministry on Tuesday said India’s scheduled commercial banks (SCBs) closed 2025-26 with robust credit growth of 15.9%, up sharply from 10.9% a year ago.
The 497-basis-point expansion reflects sustained economic momentum and rising demand for credit across sectors. Total non-food credit outstanding stood at ₹212.9 trillion as of March 2026, up by ₹29.2 trillion from the previous year.
The growth was broad-based, led by the services sector, followed by personal loans, agriculture, and industry, according to the finance ministry statement.
Credit to agriculture and allied activities grew by 15.7%, up from 10.4% in 2024-25, indicating continued strength in rural demand and improved credit flow to the farm sector. The government attributed this rise to sustained rural consumption and ongoing formalization of credit delivery systems.
Industrial credit also saw a significant uptick, expanding by 15% compared to 8.2% a year ago, driven largely by strong lending to micro, small and medium enterprises (MSMEs). Credit to micro and small industries surged 33.1% on-year, while credit to medium industries rose 21.7%. Key sectors supporting this growth included infrastructure, metals, chemicals, petroleum and coal products.
The services sector, which accounts for around 28% of total credit, recorded the highest growth at 19%, up from 12% in the previous year. This was primarily driven by strong demand from non-banking financial companies (NBFCs), trade, and commercial real estate segments.
Meanwhile, personal loans, which account for the largest share at 33% of overall credit, grew by 16.2% during 2025-26, compared with 11.7% in the previous year. The growth was supported by steady housing loans and strong demand for vehicle financing and gold-backed loans.
Stable footing
The government said the strong credit growth reflects a resilient domestic economic environment, supported by a low-interest rate regime, ongoing public capital expenditure, and structural reforms that have helped crowd in private investment. The trend also signals growing confidence among both corporate and individual borrowers.
Despite global uncertainties, including geopolitical tensions and economic fragmentation, India has maintained its position as one of the fastest-growing major economies. The banking sector remains well-capitalized, with improved asset quality and sustained profitability, enabling it to support continued credit expansion, the statement said.
The data also reflects the impact of policy efforts aimed at expanding and formalizing credit access, contributing to broader, more inclusive lending across the economy.
“Credit growth has been robust in 2025-26. This was supported by robust growth in bank lending to NBFCs, Passenger and commercial vehicles (post-GST reduction), personal gold loans (increase in gold prices) and MSME lending. While the overall figure of 15.9% is slightly inflated due to the readjusted base of 4.4.25, the MSME lending growth data is also inflated due to the revised definition of MSME during the year,” said Sanjay Agarwal, senior director at CareEdge Ratings.
Agarwal added that generally, the banking system accommodated a higher credit risk tolerance threshold to support growth and protect margins. Further, with relatively higher rates on bonds/NCDs and overseas borrowings, many large borrowers were inclined to borrow from banks.
