The implementation of Goods and Services Tax (GST) 2.0 and festival season drove credit growth to 11.38% (year on year)– the highest since January, according to the fortnightly data released by the Reserve Bank of India. Bank credit stood at Rs 192.66 lakh crore as on October 3. On a fortnightly basis, credit growth inched up by nearly 2%.
At the same time, deposits continued to grow at high single digit for the third consecutive fortnight. As on October 3, it was at Rs 240.98 lakh crore, up 9.94% on year. On a fortnightly basis, deposits rose 2.34%. Investment by banks were up 6.48% on year to Rs 68.76 lakh crore as on October 3. On a fortnightly basis it was largely flat.
“This resurgence appears to be primarily driven by the retail segment, supported by festive season demand and recent GST reforms,” Sachin Sachdeva, vice president, sector head – financial sector ratings, ICRA said.
He added that ICRA maintains its estimate of total credit offtake in FY26 will be Rs 19.0–20.5 lakh crore, translating to a year-on-year growth of 10.4–11.3%.
“We believe the RBI’s measures could push credit growth in the Indian banking system toward the upper end of our 11.5%-12.5% expectation,” said Shinoy Varghese, S&P global credit analyst.
He added that most banks can accommodate this faster clip while maintaining their asset quality. “That said, risks to asset quality could arise from the easy access to funding with lighter covenants tempting corporates to increase leverage,” he said.