Credit Growth Outpaces Deposit Increase in April-January
Bank credit growth in India has surged ahead of deposit mobilization this financial year, leading to tighter system liquidity. By the end of January 2026, the incremental credit-deposit (CD) ratio reached 96.9%, indicating that banks lent out nearly ₹97 for every ₹100 of new deposits. This trend reflects a robust demand for credit, with banks ramping up loan disbursements amid a backdrop of increasing economic activity.
Credit and Deposit Growth Trends
Data from the Reserve Bank of India reveals that aggregate deposits grew by 10.2% as of January 31, 2026, amounting to an increase of ₹23 lakh crore. In contrast, credit expanded at a faster rate of 12.2%, totaling ₹22.3 lakh crore during the same period. This marks a significant rise from the previous year, where deposits grew by 8.1% and credit by 8.7%. Year-on-year, credit growth reached a 19-month high of 14.6%, compared to 11.4% a year earlier, while deposit growth improved to 12.5% from 10.3%. The persistent gap between credit and deposit growth underscores a strong demand for loans relative to the increase in deposits.
Sources of Lending and Economic Impact
Non-food credit has seen a year-on-year increase of ₹25.7 lakh crore, bringing the total to ₹203.9 lakh crore. Bankers indicate that much of this lending is being financed through household savings rather than excess liquidity from the central bank. This shift suggests that credit growth is increasingly linked to economic activity and GDP expansion. The current lending environment reflects a robust economic landscape, prompting banks to adjust their growth targets upward.
Bank Strategies and Future Outlook
In light of the positive credit momentum, several banks have revised their growth targets. C.S. Setty, chairman of the State Bank of India, announced a focus on balancing resource costs while aiming for at least 10% growth in corporate credit over the next two quarters, supported by a ₹7 lakh crore pipeline. SBI has adjusted its credit growth forecast to between 13% and 15% for the year. Similarly, ICICI Bank’s CFO Anindya Banerjee noted a clear upward trend in growth rates, with expectations of sustained momentum into the fourth quarter across both retail and corporate segments.
Retail and MSME Loan Growth
Canara Bank’s Managing Director and CEO Hardeep Singh Ahluwalia highlighted that retail and micro, small, and medium enterprises (MSME) loans are driving the bank’s growth. The bank’s retail assets under management (RAM) have grown by 18.7%, with retail loans increasing by 31.4% and MSME loans by 13.7%. Ahluwalia stated that the yields for MSME advances and retail loans remain healthy, at 9.3% and 8.9%, respectively, which supports the bank’s margins. Canara Bank aims to build on this retail momentum, projecting an advances growth guidance of over 13.6%. On the liability side, savings bank deposits have risen by 8.5%, with individual savings accounts growing over 10% and current accounts increasing nearly 15%.
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