Archive · 29 Jan 2026
Indian Banks Predict 10-12% Credit Growth
Indian banks are expected to grow their loans by 10-12% each year for the next five years.
This is higher than the expected growth in deposits, which is around 9-11%.
The quality of loans has improved, with fewer bad loans.
Banks have strong financial cushions to handle risks.
The growth in loans will be driven by areas like housing, vehicles, and small business loans.
The banks' funding costs might increase, but they can manage this with better efficiency and fees.
The government's spending on infrastructure and other areas will also help boost loans.
However, relying too much on domestic demand without improving productivity and exports could weaken the currency and increase the cost of borrowing.
Indian banks expected to see 10-12% credit growth annually over the next five years.
Deposit growth anticipated to be around 9-11% CAGR, below earlier high-teens growth.
Asset quality improved with gross NPAs falling to 2.2% by September 2025.
Capital adequacy ratio maintained at 17.2% as of September 2025.
Credit growth driven by retail, MSME, services, and government capex in infrastructure and renewables.
- Who
- Indian banks
- What
- Expected credit growth of 10-12% CAGR over the next five years
- When
- Over the next five years
- Where
- India
- Why
- Driven by retail, MSME, services, and government capex in private investment
Domestic Demand Focus
Export and Productivity Focus
Economic Growth Strategy
Domestic Demand Focus
Relying on domestic demand and credit-enabled consumption for near-term economic activity.
Export and Productivity Focus
Emphasizing higher productivity, enhanced manufacturing competitiveness, and sustained export growth for long-term economic strength.
- Credit Growth
- 10-12% CAGR over next 5 years
- Deposit Growth
- 9-11% CAGR over next 5 years
- Credit-to-Deposit Ratio
- High-70s to low-80s range
- Gross NPAs
- 2.2% as of September 2025
- Capital Adequacy Ratio (CRAR)
- 17.2% as of September 2025
- CASA Ratios
- High-30s range
- Key Drivers of Credit Growth
- Retail, MSME, Services, Housing, Vehicle, Consumer, Cash-flow-backed SME lending
- Current Account Deficit (CAD)
- 0.8% of GDP in the first half of the current financial year
Sources
Indian banks set for 10–12% credit growth; asset quality to strengthen
Disproportionate reliance on domestic demand, credit-enabled consumption tends to sustain weaker currency: Survey
“Asset quality to improve in next two quarters”: Pralay Mondal, MD & CEO, CSB Bank
Canara Bank Q3 Results: Profit climbs 26% as slippages ease, NPAs fall
Adani Power Q3FY26 PAT slips 18.9% YoY to Rs 2,479 crore
