Archive · 27 Aug 2026
India Ratings Lifts FY27 Bank Credit Growth Forecast To 15%
India Ratings expects Indian banks to lend more money in FY27.
It raised its forecast for loan growth from 13% to 15%.
However, banks may earn slightly less because they will need to set aside more money for possible loan losses.
This is part of a new Expected Credit Loss system.
Public-sector banks may feel more pressure because they have smaller cushions for these provisions.
Bank deposits have not grown as quickly as loans, which has pushed up the loan-deposit ratio.
Deposits from overseas Indians may help banks attract more money, but the improvement could be temporary.
The report also expects trade-receivables financing through TReDS to grow by at least 10-15% over the next few years.
India Ratings raised its FY27 bank credit growth forecast to 15% from 13%, below the 19.3% year-on-year growth recorded on July 31.
Credit costs are projected to increase to 0.74% in FY27 from 0.65% in FY26 as banks transition to Expected Credit Loss provisioning.
System-wide return on assets is expected to decline by 0.06 percentage points to 1.31% in FY27, with public-sector banks facing greater pressure.
Deposit growth is forecast at nearly 13.6% in FY27, while the loan-deposit ratio reached 84.8% in the first quarter compared with 71.7% in FY22.
The Trade Receivables Electronic Discounting System could grow by at least 10-15% over the next two to three years, according to India Ratings.
- Who
- India Ratings, Indian banks, non-banking finance companies and the Trade Receivables Electronic Discounting System.
- What
- India Ratings revised its FY27 bank credit growth forecast upward to 15% and assessed profitability, deposits, NBFCs and TReDS prospects.
- When
- The assessment was reported on August 27 and covers FY27.
- Where
- India; the report was datelined Mumbai.
- Why
- Expected stronger corporate working-capital lending, diaspora deposits and more attractive bank borrowing for NBFCs supported the higher credit-growth forecast, while Expected Credit Loss provisioning is expected to raise costs.
- FY27 credit growth forecast
- 15%, revised up from 13%
- Current credit growth
- 19.3% year-on-year as of July 31
- Projected FY27 credit costs
- 0.74%, compared with 0.65% in FY26
- Projected FY27 return on assets
- 1.31%, down 0.06 percentage points year-on-year
- FY27 deposit growth forecast
- Nearly 13.6%, including the expected impact of FCNR(B) deposits
- Loan-deposit ratio
- 84.8% in the first quarter of FY27, compared with 71.7% in FY22
- TReDS growth outlook
- At least 10-15% over the next two to three years