Mumbai: Lower interest rates, GST rationalization and a sharp revival in wholesale lending has helped banks’ sustain double digit credit growth that has risen by 14.6 per cent year on year in the fortnight ended January 31, 2026 to Rs 204.75 lakh crore. Deposit growth also remained strong, rising 12.5 per cent year on year during the same period to Rs 248.81 lakh crore. In the fortnight, credit expanded by Rs 3.41 lakh crore or 1.7 per cent, and deposits expanded by Rs 3.82 lakh crore or 1.6 per cent according to the data released by the Reserve Bank of India on Friday.
Interestingly, bank credit growth had slowed down a bit in the first fortnight of 2026 (January 15) to 13.1 per cent year on year while deposit growth had slowed to 10.6 per cent year on year. In the fortnight, credit had contracted by Rs 1.88 lakh crore while deposits contracted by Rs 3.57 lakh crore.
Credit growth had remained subdued in the first half of the year but gained traction from late August and continued to strengthen during the festive period, GST rate cuts and improved corporate credit growth.
Several lenders during the Q3FY26 earnings announced an upward revision in credit growth. Last week, the country’s largest lender State Bank of India (SBI) raised its FY26 credit growth guidance to 13-15 per cent from 12-14 per cent earlier, after reporting a strong December-quarter performance that saw net profit jump 24.5 per cent year-on-year to ₹21,028 crore. CS Setty chairman SBI said, “Credit growth has remained strong and there has been a robust demand for credit across all the segments,” adding that all the components-retail, SME, and corporate have witnessed double-digit growth.”
According to CS Setty, chairman SBI, the India-US trade deal is expected to unlock fresh opportunities for exporters and multinational supply chains, which could translate into stronger corporate lending and higher working-capital demand in the coming quarters.
Meanwhile, outstanding credit balances of Urban Co-operative banks stood at ₹3.4 lakh crore as of September 2025, representing a 1.9 times increase over the last five years, according to Sahakaar Trends, a joint publication by the National Urban Co-operative Finance and Development Corporation (NUCFDC) and TransUnion CIBIL. While UCBs continue to hold a modest share of overall industry credit at around 1.8 per cent, the data shows a system that is expanding in scale while adapting to changing borrower profiles, competitive dynamics, and regulatory expectations.