Indian banks are witnessing a clear divergence in credit growth trends, with corporate loan books accelerating faster than retail in recent quarters—a shift increasingly linked to cyclical funding dynamics rather than a structural change in demand.
Data from major lenders shows corporate credit growth strengthening meaningfully into FY26. Axis Bank has seen corporate loan growth rise from 8% in Q4FY25 to 38% by Q4FY26, while RBL Bank has reported a sharp acceleration to 26%. HDFC Bank and ICICI Bank continue to show steady growth at 13% and 9.3% respectively, while Union Bank remains in low single digits.
The PSU lender has a corporate pipeline of Rs 58,000 crore, of which Rs 30,000 crore has been sanctioned, management said in its post earnings media conference. Banks, however, continue to flag sustained underlying demand in corporate lending despite global uncertainty.
“We do see corporate demand sustaining, with opportunities across sectors like electronics, food processing, auto, renewables and semiconductors. Emerging corporates are also holding up well, and we are seeing additional opportunities in acquisition financing and project finance,” said Kaizad Barucha, deputy managing director at HDFC Bank said in a post earnings analyst call.
Retail loan growth
In contrast, retail loan growth remains relatively muted across large private banks. HDFC Bank’s retail book growth has eased from 9% to 6.5%, while ICICI Bank remains range-bound at around 9–9.5%. Axis Bank has seen retail growth inch up to 8%, though the overall trajectory remains softer compared to corporate credit. The exception is RBL Bank, where retail growth has surged to 20%.
At RBL Bank, management said near-term growth will be led by wholesale lending following capital infusion, before gradually tilting toward retail secured assets. “The rate of growth of wholesale will be higher in the initial period, and thereafter it will moderate as we move towards retail secured lending,” the bank said.
What do analysts say?
Analysts attribute the divergence less to weak retail demand and more to relative funding dynamics. “The corporate bond market and overseas funding remain costly right now, so borrowing is shifting back to bank loans. SME credit continues to grow in the 25–30% range, but large corporate lending will remain fickle as it competes with a high base and depends on capital market conditions,” said Sanjay Agarwal, Senior Director at CareEdge Ratings said.
The implication, analysts say, is that the current uptick in corporate credit may not sustain if bond and overseas borrowing conditions ease, potentially rebalancing growth back toward retail and SME segments over time.
| CORPORATE BOOK GROWTH | |||||
| Bank | Q4FY25 YoY% | Q1FY26 YoY% | Q2FY26 YoY% | Q3FY26 YoY% | Q4FY26 YoY% |
| HDFC Bank | -3.60% | 1.70% | 6.40% | 6.40% | 13.00% |
| ICICI Bank | 11.90% | 7.50% | 3.50% | 5.60% | 9.30% |
| Axis Bank | 8% | 9% | 20% | 27% | 38% |
| Union Bank | 6.85% | 2.68% | 1.12% | 5.09% | 6.39% |
| RBL Bank | -2% | 7.67% | 16.61% | 16.50% | 26% |
| Note: YoY% for Q4FY25 and Q1FY26 for Union Bank are for the Large corporate+ Others | |||||
| RETAIL BOOK GROWTH | |||||
| Bank | Q4FY25 | Q1FY26 YoY% | Q2FY26 YoY% | Q3FY26 YoY% | Q4FY26 YoY% |
| HDFC Bank | 9% | 8.10% | 7.40% | 6.90% | 6.50% |
| ICICI Bank | 8.90% | 6.90% | 6.60% | 7.20% | 9.50% |
| Axis Bank | 7% | 6% | 6% | 6% | 8% |
| Union Bank | 22.14% | 25.63% | 23.98% | 21.67% | 16.75% |
| RBL Bank | 13% | 5% | 10% | 10% | 20% |