Bank credit growth, which had hit a low of 9 per cent in May 2025, has been steadily increasing since the second half of last year, spurred by ample liquidity and low interest rates. Credit growth of scheduled commercial banks accelerated to 19.3 per cent year-on-year (YoY) in July 2026, a 26-month high. Loans to industry recorded the highest growth, while growth in personal loans moderated.

businessline’s analysis of data from RBI shows that outstanding bank credit rose to ₹220.8 lakh crore in July 2026 from ₹185 lakh crore a year earlier. Credit to industry grew the fastest, at 21.6 per cent YoY to ₹48 lakh crore in July 2026 from ₹39.5 lakh crore a year earlier. Loans to the services sector rose 21.2 per cent to ₹62 lakh crore from ₹51.1 lakh crore. Personal loans, the largest category, grew 16.6 per cent to ₹71.8 lakh crore. Agriculture and allied activities credit grew 17 per cent to ₹27.1 lakh crore.

“The sharp acceleration in bank credit growth reflects a broad-based revival rather than dependence on any single segment,” said Ramkumar Subramanian, Partner, Grant Thornton Bharat. He attributed the rise to stronger credit demand from corporates, services businesses and consumers, indicating improving economic confidence and investment activity.

Dr Anil Sinha, Professor of Finance, FIIB, Delhi, said stronger economic activity, improving investment demand and confidence among lenders and borrowers were driving the acceleration.

Within industry, medium enterprises recorded the fastest credit growth at 30.5 per cent, with outstanding credit rising to ₹4.8 lakh crore from ₹3.7 lakh crore. Micro and small enterprise credit rose 22.6 per cent to ₹10.9 lakh crore, while large industry credit grew 17.7 per cent to ₹32.3 lakh crore.

Subramanian said medium enterprises were in a “sweet spot,” scaling capacity and formalising operations while benefiting from supply-chain diversification. Sinha said larger companies had greater access to bond markets and other funding sources, while government policy support was encouraging MSME production and employment.

Personal credit remained the largest category despite slower growth. Subramanian attributed this to lenders being increasingly focused on secured retail assets and adopting a more calibrated approach to unsecured lending.

Going ahead, both experts said the pace would depend on investment, interest rates, asset quality, and the broader economic environment. They said infrastructure spending, private capex, and demand in MSME and services could support credit growth, while prudent underwriting would remain important.

Published on September 29, 2026