Boom in India's Banking Sector: Credit Growth Surges to 9.62% YoY
Increase in Credit Expansion Observed in June, Following Three-Year Minimum Dip - According to RBI Statistics
India's banking sector experienced a significant revival in credit growth, reaching an impressive 9.62% year-on-year as of June 13, 2025, according to the Reserve Bank of India (RBI) data[1][2]. This comeback follows a three-year low recorded at 8.97% at the end of May 2025.
The latest figures reveal that the banking sector's credit stood at an impressive Rs 183.14 lakh crore[1][2]. On a fortnightly basis, credit growth saw a minor increase of 0.15%.
Although imports of Russian oil could potentially surge to a two-year high in June, analysts believe this growth in the banking sector is not solely attributable to oil trade[1][2]. Instead, they predict that the credit growth could touch 12-13% in 2025-26 (Apr-Mar)[1][2].
Deposits and Investments
The growth in deposits picked up in June, standing at Rs 230.7 lakh crore, up 10.3% year-on-year. However, on a fortnightly basis, deposits saw a slight decline of 0.44%. Despite the minor setback, the deposit growth outpaced credit growth, providing banks with a wealth of liquidity to lend[1][2].
Bank investments also experienced a slight decline on a fortnightly basis, dropping by 0.23%. But the annual growth of investments still remained robust, expanding by 7.38% year-on-year[1][2].
Steady Recovery
The recovery in India's banking sector appears to be underpinned by the base effect, an improvement in demand, healthy deposit growth, stable investment levels, and sectoral market share gains[1][2]. For instance, in the automotive finance segment, banks saw a boost in their market share for new and used vehicle loans in Q1 2025[4].
The outlook for the banking sector in 2025-26 remains optimistic, with analysts suggesting that credit growth could reach the target range of 12-13% for the entire fiscal year[1][2]. The sustained recovery and favorable economic conditions indicate that the rebound in credit demand will continue for the near future.
[1] https://economictimes.indiatimes.com/[2] https://www.reuters.com/[4] https://auto.economictimes.indiatimes.com/
- The boost in India's banking sector recuperation is attributed to several factors including the base effect, improved demand, healthy deposit growth, stable investment levels, and sectoral market share gains, such as in the automotive finance segment.
- Despite a minor decline on a fortnightly basis, deposits in India's banking sector continue to grow robustly, outpacing credit growth and providing banks with a substantial amount of liquidity.
- Both the annual growth of investments and the credit growth in India's banking sector are projected to touch 12-13% by 2025-26, demonstrating a strong and sustained recovery in the segment.
- The finance, banking, and business sectors, including investments in forex, market, and DeFi, are expected to benefit from this optimistic outlook for India's banking sector in the near future, given the promising growth figures and economic conditions.
