Bank credit growth in FY2026 exceeded 7%, marking a significant milestone driven predominantly by retail loans, according to the latest industry insights. This surge underscores shifting borrower preferences and banks’ adept adaptation to consumer needs in a post-pandemic world.
Breaking down the numbers, retail portfolios expanded briskly across categories: education loans for skill upgradation, gold loans amid festive seasons, and MSME working capital disguised as retail products. Public sector banks, traditionally conservative, have ramped up retail exposure to diversify from corporate loans.
Technological advancements like AI-driven credit scoring have slashed processing times, enabling instant disbursals. Government schemes promoting affordable housing have further catalyzed mortgage growth. However, whispers of stress in microfinance segments serve as a cautionary tale.
On the flip side, industrial credit grew anemically due to capex delays and global supply chain issues. This retail tilt has implications for monetary policy, as consumption credit influences inflation dynamics more directly.
Stakeholders are bullish, forecasting this trend’s persistence amid falling EMIs from anticipated rate cuts. For the economy, it’s a double-edged sword: boosting growth while elevating debt vulnerabilities. Banks’ focus on retail signals a new era of inclusive finance, but vigilance is paramount to ensure sustainable expansion.