India's Bank Credit Growth Soars to 15.9% in FY26 on Strong Demand

India's non-food bank credit grew by a robust 15.9% in FY2025-26, a sharp rise from 10.9% the previous year. The expansion was broad-based, led by services, personal loans, agriculture, and industry, says the Finance Ministry.

India's bank credit growth remained robust in the financial year 2025-26, with non-food credit expanding 15.9 per cent year-on-year, up sharply from 10.9 per cent in the previous year, according to the Ministry of Finance.

The aggregate outstanding credit stood at Rs 212.9 lakh crore as of March 2026, registering an increase of Rs 29.2 lakh crore over the previous year, reflecting strong demand across sectors of the economy.

The growth momentum was supported by a low interest rate environment and the government's capital expenditure push, which, aided by structural reforms, has helped crowd in private investment and improve credit uptake among corporates as well as individual borrowers.

Broad-Based Credit Expansion Across Sectors

Credit expansion during FY2025-26 remained broad-based, led by the services sector, followed by personal loans, agriculture and allied activities, and industry.

Credit to the agriculture and allied sector grew by 15.7 per cent during the year, significantly higher than 10.4 per cent recorded in FY2024-25. The increase reflects sustained rural demand and improved formalisation of credit delivery in the farm sector.

Industrial credit also witnessed a sharp pickup, growing at 15 per cent compared to 8.2 per cent in the previous year. Within the segment, micro and small industries registered a strong 33.1 per cent growth, while medium industries recorded a 21.7 per cent rise. Key sectors driving industrial credit included infrastructure, basic metals, chemicals, and petroleum-related industries.

The services sector recorded the highest growth among all segments, with credit expanding by 19 per cent year-on-year, up from 12 per cent in the previous year. The surge was largely driven by increased lending to non-banking financial companies (NBFCs), trade, and commercial real estate.

Meanwhile, the personal loans segment, which accounts for about 33 per cent of total credit, grew by 16.2 per cent in FY2025-26, compared to 11.7 per cent a year ago. Housing loans maintained steady growth, while vehicle loans and loans against gold jewellery saw strong demand.

Economic Resilience and Banking Sector Strength

The robust expansion in credit reflects a resilient domestic economic environment and rising appetite for borrowing across sectors. Increased credit offtake has supported business expansion, investment in fixed assets, and consumption of durable goods, contributing to higher industrial activity and employment generation.

Despite global uncertainties, including geopolitical tensions and geo-economic fragmentation, India has continued to demonstrate strong economic resilience and remains among the fastest-growing major economies globally.

The banking sector, described as well-capitalised with historically low levels of stressed assets and sustained profitability, continues to play a key role in supporting economic growth.

The government's continued efforts to formalise and democratise access to credit have further contributed to the broad-based expansion in lending across the economy.

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