India Ratings Raises Credit Growth Forecast, Warns of Margin Pressure

India Ratings thinks banks may lend more money this financial year than it previously expected.

It raised its forecast from 13% growth to 15%.

Recent lending has grown quickly, but much of it is to companies and non-bank finance firms.

These loans generally earn less money than some other types of loans.

Banks are also finding it harder to collect enough deposits to support all their lending.

This can increase funding costs and reduce profits.

The agency expects loan losses to rise somewhat, but it does not currently see a major problem with bad loans.

It says lending growth will probably slow later in FY27.