Archive · 27 Nov 2025
India's GDP Growth and Banking Sector Outlook
India's economy is growing, but the gap between the nominal and real GDP growth is shrinking.
In the first quarter of the fiscal year 2025-26, the nominal GDP growth was 8.8%, just 1% higher than the real GDP growth of 7.8%.
This is lower than the budgeted nominal GDP growth of 10.1% for the year.
The banking sector is expected to perform better in the second half of the fiscal year 2026, with credit growth driven by retail and MSME segments.
Non-banking financial companies (NBFCs) are also seeing improvements in asset quality, with a significant rise in their assets under management since 2021.
However, some segments like microfinance and MSME lending are facing challenges with higher delinquencies and credit costs.
Nominal GDP growth in Q1 FY25-26 was 8.8%, lower than the budgeted 10.1% for FY25-26.
Real GDP growth in Q1 FY25-26 was 7.8%, with a narrowing gap between nominal and real growth.
Banking credit is expected to grow at 11.5-12.5% in FY26, driven by retail and MSME segments.
NBFCs have seen a more than 1.7x rise in AUM since FY21, with improving asset quality.
Challenges in the NBFC sector include higher delinquencies in microfinance and MSME lending.
- Who
- Indian economy and banking sector
- What
- GDP growth trends and banking performance
- When
- Q1 FY25-26 and FY26
- Where
- India
- Why
- To understand economic performance and sector outlook
- Nominal GDP Growth (Q1 FY25-26)
- 8.8%
- Real GDP Growth (Q1 FY25-26)
- 7.8%
- Budgeted Nominal GDP Growth (FY25-26)
- 10.1%
- Expected Nominal GDP Growth (FY25-26)
- 8-8.5%
- Banking Credit Growth (FY26)
- 11.5-12.5%
- Credit-to-Deposit Ratio
- Approximately 80%
- NBFC AUM Growth (FY21-FY25)
- More than 1.7x
- Retail Share in NBFC AUM (FY25)
- 56%
