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India's Banking Sector Resilient, Poised for Strong Credit Growth: BoB Report

A Bank of Baroda report asserts India's banking sector remains resilient with strong fundamentals, citing an acceleration in overall credit growth to 11.5%. The growth is uneven across sectors, with micro and small enterprises emerging as a powerhouse with 24.6% expansion. Supportive liquidity measures from the RBI and improving macroeconomic conditions are expected to sustain this credit momentum. The report concludes that softening interest rates and continued festive demand will further strengthen credit offtake in the near term.

Key Points: Indian Banking Resilient, Credit Growth to Strengthen: BoB

  • Credit growth accelerated to 11.5%
  • Micro & small enterprises drove robust 24.6% growth
  • Sectoral trends show uneven recovery
  • Supportive RBI policies underpin positive outlook
2 min read

Indian banking sector resilient; fundamentals strong for further credit growth: Bank of Baroda report

Bank of Baroda report highlights resilient banking sector with 11.5% credit growth, strong fundamentals, and a positive outlook driven by supportive RBI measures.

"India's banking sector has remained resilient, underpinned by calibrated risk management and improving asset quality. - Bank of Baroda Report"

New Delhi, January 2

India's banking sector has remained resilient, underpinned by calibrated risk management and improving asset quality, with overall credit offtake expected to strengthen in the near term as interest rates soften, GST rationalisation progresses, and festive demand continues, according to a report by Bank of Baroda.

The report, authored by economist Jahnavi Prabhakar, attributed the positive outlook to supportive liquidity enhancement measures by the Reserve Bank of India, which are expected to enable banks to step up lending.

The Bank of Baroda report put out on Friday asserted that overall bank credit growth accelerated to 11.5 per cent in November 2025 from 10.6 per cent a year earlier, with outstanding bank credit rising to Rs 195 lakh crore compared with Rs 175 lakh crore in November 2024.

Non-food credit also strengthened, growing by 11.4 per cent year-on-year, broadly reflecting steady momentum across sectors.

Sectoral trends, however, were uneven. Credit growth to agriculture moderated sharply to 8.7 per cent in November 2025 from 15.3 per cent a year earlier, while credit to industry improved to 9.6 per cent from 8.3 per cent

Within industry, micro and small enterprises emerged as a key driver, recording a robust 24.6 per cent growth compared with 10.2 per cent last year, aided by higher lending from public sector banks. Medium industries saw credit growth of 15.7 per cent, while large industries lagged at 4.6 per cent

The services sector reported credit growth of 12.8 per cent, marginally higher than 11.7 per cent in the previous year, with trade credit remaining strong at 14.2 per cent. Lending to non-banking financial companies rose by 9.5 per cent, reflecting healthy demand for funds in the shadow banking space

Personal loan growth moderated to 12.8 per cent from 13.4 per cent a year earlier, influenced by regulatory measures introduced by the RBI. Within this segment, vehicle loans recorded an improvement, growing by 12.4 per cent, in line with stronger vehicle sales. In contrast, credit card outstanding growth slowed sharply to 2.4 per cent, while housing and other personal loans remained subdued due to tighter capital norms

At an industry level, credit growth aligned closely with real sector performance. Mining, electronics, engineering, vehicles, and gems and jewellery recorded strong double-digit growth, mirroring improvements in output and exports, the report noted

Overall, the report concluded that improving macro conditions and supportive policy measures should help sustain credit momentum in the coming months.

- ANI

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Reader Comments

S
Sarah B
The data looks solid overall, but the sharp moderation in agricultural credit growth from 15.3% to 8.7% is a bit concerning. With so much of our population dependent on farming, we need to ensure credit flow to this sector remains robust, especially with climate challenges. Hope this is addressed in the next quarter.
V
Vikram M
Finally some good news for the common man! If interest rates soften as mentioned, it should make home loans and vehicle loans more affordable. The 12.4% growth in vehicle loans already shows the demand is there. Waiting for banks to pass on the RBI's rate cuts quickly to borrowers.
P
Priya S
As a small business owner, I can feel this momentum. Getting a working capital loan was much smoother this festive season compared to last year. The system does seem more resilient. Hope this translates into even easier processes for women entrepreneurs like me.
R
Rohit P
The report is positive, but I have a respectful criticism. It glosses over the "subdued" housing loans due to tighter norms. For middle-class families, buying a home is the biggest dream. While risk management is important, shouldn't there be a balanced approach to keep the dream alive? Just a thought.
K
Karthik V
Strong fundamentals are key for attracting foreign investment. This kind of stable, data-backed reporting from our own banks builds immense credibility globally. The growth in sectors like electronics and gems & jewellery, linked to exports, is particularly promising for our forex reserves. Good going!

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