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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)
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