India's bank credit growth to stay robust at 14 pc in FY27, H2 moderation likely: HSBC
New Delhi, August 6
India's bank credit growth is expected to remain robust at around 14 per cent in FY27, however, growth may moderate in the second half of the fiscal due to an adverse base effect and a potential slowdown in corporate loan demand, according to a report by HSBC Global Investment Research.
The report noted that several banks reporting first-quarter FY27 results posted strong loan growth, with management indicating no signs of asset quality stress across segments and expecting credit growth to remain robust.
"The recently announced Emergency Credit Line Guarantee Scheme (ECLGS) should also provide incremental support," it further noted.
Corporate credit growth surged to 20.4 per cent year-on-year in June from 18.9 per cent in May, driven by a shift in corporate borrowing from the bond market to banks, higher working capital financing, and increased lending to NBFCs.
HSBC expects loan growth to moderate in the second half of FY27 due to adverse base effects, with any slowdown in corporate lending likely to weigh on overall credit growth.
"We revise our FY27e loan growth to 14% y-o-y (from 12% y-o-y) as we expect growth to moderate in 2HFY27 from the current c18% y-o-y due to base effects and expectation of a slowdown in corporate loan growth," HSBC noted.
In June 2026, India's non-food credit growth surged to 18.3 per cent year-on-year and 2.0 per cent month-on-month, up from 17.3 per cent year-on-year and 1.2 per cent month-on-month in May.
At the same time, retail credit grew 15.8 per cent year-on-year and 1.4 per cent month-on-month while loan growth across retail loan categories like housing, vehicles and unsecured loans remained largely stable.
MSME lending also rose 20.5 per cent and 2.1 per cent and corporate credit expanded 20.4 per cent and 2.5 per cent. Additionally, agriculture loans also surged 16.8 per cent and 2.0 per cent, respectively in June.
— ANI
Reader Comments
The MSME lending growth at 20.5% is a very positive sign. These small businesses are the real backbone of our economy. ECLGS support from the government is helping them recover and expand. Hope this momentum continues and creates more employment opportunities. 💪🇮🇳
The shift from bond markets to bank loans is interesting. Corporates clearly finding bank financing more attractive now. But I'm concerned about the H2 slowdown prediction - also there's inflation and global volatility to consider. 14% projection seems quite optimistic, let's see how it plays out.
Nice to see agriculture loans up 16.8%! Finally our farmers getting the credit they need for modern equipment and better seeds. But need to ensure this money isn't stuck in paperwork or reach them on time. Ground level implementation matters a lot. 🌾
Solid fundamentals in the Indian banking system. Retail credit stability and strong corporate lending are good indicators. The H2 slowdown is just about base effects, not an actual deterioration. Indian economy is on a good trajectory compared to many other emerging markets.
All this credit growth is fine, but for the common citizen the cost of living is still very high. Banks giving loans liberally isn't always a great sign if people are taking multiple loans just to manage daily expenses. Need more focus on savings and investment awareness too. 🤔
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