Crisil Ratings expects a 11-12% credit growth in the current financial year, backed by a pick-up in retail credit in the second half, the agency said in a webinar on Monday. Consumption push following GST rationalisation, lower inflation and better affordability in the lower interest rate regime will drive the growth, it said.
“A slew of other regulatory measures such as revised LCR norms, rollback of higher risk weights on NBFC lending and the final project financing norms being less stringent than the draft ones have also removed potential constraints on the supply side. These should encourage banks to pursue credit growth,” Krishnan Sitharaman, chief ratings officer at Crisil Ratings, said.
Retail Credit to Lead Growth
The agency expects retail credit to grow at 13%, compared with 11.7% in the last fiscal. Growth in the micro, small and medium enterprises segment is likely to remain stable. Banks, however, are likely to exercise caution, especially towards export-oriented units, the agency said. It expects corporate credit to revive once rate-cut transmissions kick in.
The growth in corporate lending is pegged at 9% in FY26, marginally lower than 9.7-10% seen in FY25.
The key monitorables are the evolving external environment which could pose downside risks to the GDP growth, the revival in private capital expenditure and the impact of macro developments on export-oriented MSMEs.
Deposits, NPAs Remain in Focus
Crisil is expecting deposits to grow in the same range as credit, going forward. However, the agency has noticed a change in the composition. The share of the household sector in deposits reduced from 64% in March 2020 to 60% in March 2025. “This 4% drop has been largely filled in by non-financial corporations. This does have certain implications on the stability of the deposit base,” Ajit Velonie, senior director at Crisil Ratings, said.
In terms of the asset quality, the agency expects non-performing asset ratios to have bottomed out. However, bad loans in MSME books are likely grow in select export-oriented segments. Retail unsecured loans continue to be a key monitorable, the agency said.