Credit

India’s banking system continues to witness robust lending activity, with credit growth holding steady at 14.4% year-on-year, underscoring sustained demand across retail, services and industrial segments. The double-digit expansion reflects resilient economic activity, steady consumption patterns and improving corporate balance sheets. While deposit growth remains comparatively moderate, banks have maintained lending momentum through calibrated liquidity management and selective risk underwriting.

India’s financial ecosystem is undergoing a structural transformation as policymakers, banks and fintech firms intensify efforts to bring underserved populations into the formal credit system. Expanding access to institutional lending for micro-entrepreneurs, rural households and informal workers has become central to inclusive economic growth. Digital public infrastructure, alternative credit scoring models and targeted policy interventions are reshaping credit delivery mechanisms.

India’s banking sector recorded a rise in the credit-deposit (C-D) ratio to 82%, according to a recent report, reflecting robust lending activity and healthy credit growth across retail, corporate, and priority sectors. The increase indicates banks are deploying a higher proportion of deposits into loans, supporting economic activity while maintaining liquidity buffers. Analysts note that rising credit utilization underscores confidence in demand for capital and business expansion.

Sanctions under the Credit Guarantee Scheme have reached Rs. 3,362 crore, reinforcing the government’s push to expand formal credit access for micro, small, and medium enterprises. The rise in approvals reflects growing lender participation and sustained demand for collateral-free financing across key sectors. By mitigating credit risk for banks and financial institutions, the scheme continues to play a stabilizing role in MSME financing, particularly amid volatile economic conditions.

India’s credit landscape witnessed a marginal contraction in the first quarter of FY2025, with fresh loan disbursements showing a noticeable slowdown. While consumer demand for retail credit remained steady, lending across other categories softened due to tighter underwriting standards, rising delinquency concerns, and cautious strategies by financial institutions. The data highlights a shift in borrower behavior as well, with increased repayment discipline and fewer first-time loan applications.