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India bank credit growth hits 20% in June quarter: Bernstein
Bernstein says India bank credit growth hit a four-year high of ~20% YoY in the June quarter. Deposit growth lagged, keeping loan-to-deposit ratios near decade highs. The brokerage sees stable margins ahead.
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India's banking system saw credit growth accelerate to roughly 20% year-on-year in the June quarter, the highest in over four years, according to a Bernstein report. Deposit growth continued to lag, leaving the system's loan-to-deposit ratio near decade-high levels.
The report, released this week, said the credit expansion was broad-based. Industrial and services lending led the recovery. Large corporate borrowings drove industrial credit, which rose sharply. Companies in that segment account for nearly 70% of industrial loans. Credit to micro, small and medium enterprises also stayed strong.
Services lending gained momentum, with bank credit to non-banking financial companies growing by more than 30% in recent months. Bernstein said higher bond-market rates had pushed NBFCs to rely more on bank loans for funding.
"Growth momentum improved meaningfully during the quarter, with system credit growth accelerating to ~20% YoY (or ~18% adjusted for reporting changes), while deposit growth continued to lag," the report said.
Bernstein noted that changes in fortnightly reporting requirements, introduced in December 2025, contributed to the reported increase. Based on bank disclosures, the brokerage estimates underlying credit growth at around 18%.