After a relatively subdued first fortnight of the calendar year (2026), credit growth accelerated sharply in the second fortnight, with credit expanding 14.6 per cent year-on-year (YoY) in the fortnight ended January 31. Deposit growth also remained strong, rising 12.5 per cent YoY during the same period.
Bank credit growth in the first fortnight of 2026 (January 15) had slowed to 13.1 per cent YoY and deposit growth during the same period also slowed to 10.6 per cent YoY. In the fortnight, credit contracted by Rs 1.88 trillion while deposits contracted by Rs 3.57 trillion.
In the last fortnight of calendar year 2025 (December 31), bank credit grew 14.5 per cent YoY and deposits grew 12.7 per cent YoY.
The pick-up in credit growth has been aided by GST rationalisation on products and services, rate cuts by the Reserve Bank of India (RBI), and a pick-up in wholesale credit demand. The latter was driven by elevated corporate bond yields and faster transmission in bank lending rates, which narrowed the rate differential between loans and bonds.
Credit growth is expected to gather further momentum towards the business end of FY26.
Recently, the country’s largest lender, State Bank of India (SBI), revised its FY26 credit growth guidance upwards to 13–15 per cent from 12–14 per cent.
For SBI, corporate credit is expected to sustain double-digit growth, while the retail, agriculture and MSME (RAM) segment will remain the primary driver. MSME lending, in particular, is likely to benefit from improving trade sentiment and better availability of data and information.
According to C S Setty, Chairman, SBI, the trade deals are extremely positive for the economy and there are several ways in which the overall economy gets impacted positively. “I see many areas where SBI is well positioned to take advantage of the emerging scenario,” he said, adding that the trade deals with the EU, Oman, New Zealand and the US indicate that diversification of markets is now available for Indian companies. Apart from corporates, a large number of MSMEs will also benefit from this, he said.
