India’s banking sector is poised for steady growth in FY26, with loans expected to expand by 12–13%, according to leading rating agencies. Analysts project a broad-based pickup across loan categories, while overall asset quality is expected to remain stable.
Key Highlights:
- Crisil Ratings estimates bank advances to grow 12–13% in FY26, with gross NPA ratio likely to remain around 2.4% by March 31, 2026, similar to FY25 levels.
(Source: The Hindu BusinessLine) - India Ratings & Research predicts slightly higher growth of 13–13.5%, factoring in:
- The Reserve Bank of India’s advisory on risk weight for unsecured retail loans
- A potential slowdown in bank credit to NBFCs
- RBI data indicates that non-food credit growth slowed to 12% in February 2025, primarily due to reduced growth in unsecured personal loans and credit card lending.
- According to CareEdge Ratings, the BFSI sector’s credit ratio sharply fell from 2.75 in H1FY25 to 1.07 in H2FY25, signaling stress in microfinance and unsecured lending segments.
- Sanjay Agarwal, Senior Director at CareEdge, noted rising loan sizes and debt burdens are increasing strain on MFI borrowers.
- Asset quality pressures for NBFCs dealing in microfinance and unsecured business loans are likely to persist through H1FY26.
- Despite these challenges, the outlook for the BFSI sector remains “stable”, backed by strong capitalisation levels across banks and NBFCs.
NBFC Sector Outlook
- Crisil Ratings expects 15–17% growth in NBFC AUMs in FY26—higher than the past decade’s average of 14%.
- Growth will hinge on diversification of funding sources and a revival in bank lending, especially if RBI rolls back risk weight hikes.
- India Ratings reports most credit rating upgrades occurred in the NBFC space, driven by:
- Equity infusion
- Geographic expansion while maintaining asset quality
- Consolidation, where stronger NBFCs acquired weaker entities in the same segment
🔗 Source:
“Banks’ loans to grow at 12-13% in FY26: Rating agencies” – The Hindu BusinessLine
Disclaimer: This article is not authored or drafted by any employee of FinMen Advisors. The information presented is entirely sourced from the above news link. FinMen Advisors is not responsible for the accuracy, completeness, or reliability of the information.
