The financial year 2026 has delivered a credit windfall for Indian banks, with overall growth topping 7%, courtesy of a retail loan avalanche. This consumer credit boom reflects buoyant spirits across urban and rural India, hungry for homes, wheels, and lifestyle upgrades.
Key drivers include aggressive marketing by banks, zero-cost EMIs on durables, and salary-backed lending. Credit card spends hit record highs, spilling into revolving credit. Women borrowers, empowered by targeted products, contributed substantially to this rise.
RBI’s liquidity infusions and CRR cuts provided the fuel, while private lenders innovated with co-branded cards and buy-now-pay-later schemes. Corporate sector’s tepid borrowing, hampered by high base effects, allowed retail to shine brighter.
Risks loom, including over-indebtedness in low-income groups and climate-related disruptions to agri-loans. Yet, strong collection efficiencies and digital collections mitigate concerns. This growth enhances banks’ CASA ratios indirectly via salary accounts.
In conclusion, FY26’s credit story is one of retail triumph, setting the stage for a virtuous cycle of consumption and investment. Policymakers and bankers alike must nurture this momentum responsibly to propel India towards its $5 trillion economy dream.