Archive · 31 Oct 2025
Indian Banks Report Strong Corporate Loan Growth in Q2 FY26 Amidst Shifting Financing Trends
Big companies in India usually need money for their projects and to run their businesses.
Sometimes they get this money by borrowing from banks, and sometimes they get it from selling bonds or using their own savings.
In the last part of the year (Q2), many large banks saw their loans to big companies grow nicely.
This happened because companies needed more money to keep their businesses running, and also for some new investments.
This was different from the previous period (Q1), when many companies were trying to get money from other places, like selling bonds.
But interest rates on bonds went up, making them less attractive.
So, companies came back to banks for loans.
Banks were also more careful about the prices they offered for these loans, making sure they were getting a fair deal.
Some banks, like Axis Bank, saw very strong growth in their corporate loans, while others like HDFC Bank had moderate growth.
Banks also have more loan applications waiting, expecting more growth in the future.
Large private and State-owned banks in India experienced healthy growth in their corporate loan books during Q2 FY26.
This growth was primarily fueled by increased demand for working capital and some fresh corporate investment.
Banks demonstrated greater pricing discipline compared to previous quarters, moving away from aggressive pricing.
A muted domestic bond market, influenced by rising yields and geopolitical factors, led companies to increase reliance on bank financing.
Public-sector banks maintain a robust loan pipeline, while private banks anticipate strong growth in the upcoming quarters.
- Who
- Large banks, both private and State-owned, including HDFC Bank, Axis Bank, Punjab National Bank, and Bank of India.
- What
- Healthy growth in corporate loan books, driven by fresh corporate investment and higher working-capital demand, with a return to pricing discipline in lending.
- When
- Q2 FY26, with comparisons to Q1 FY26 and previous quarters.
- Where
- India
- Why
- A pickup in corporate investment, increased demand for working capital, muted issuance in the domestic bond market due to rising yields and geopolitical factors, and a shift away from alternative financing sources back to banks.
Companies' Financing Preferences
Banks' Lending Approach
Financing Sources
Companies' Financing Preferences
In Q1 FY26, companies were increasingly shifting from bank financing towards alternative sources like the domestic debt market, overseas bond and loan markets, private credit funds, and internal cash reserves.
Banks' Lending Approach
In Q2 FY26, companies returned to bank financing due to a muted domestic bond market with rising yields and increased demand for working capital.
Loan Pricing
Companies' Financing Preferences
In previous quarters, banks engaged in aggressive pricing for corporate loans.
Banks' Lending Approach
In Q2 FY26, banks adopted greater pricing discipline, seeking reasonable prices that provided adequate spread over sovereign rates.
- HDFC Bank Q2 Corporate Book Growth (Sequential)
- 4.7%
- HDFC Bank Q2 Overall Gross Advances Growth (Y-o-Y)
- 6.7%
- Axis Bank Q2 Corporate Loan Growth (Y-o-Y)
- 20%
- Axis Bank Q2 Domestic Corporate Growth
- 25%
- Punjab National Bank Q2 Corporate Loan Growth (Y-o-Y)
- 8%
- Punjab National Bank Overall Loan Growth (Y-o-Y)
- 10.5%
- Bank of India Q2 Corporate Book Growth (Y-o-Y)
- 11.7%
- Domestic Bond Market Issuance (Q2 FY26)
- ₹2.03 trillion
