Power and Infrastructure Sectors Propel 17% Credit Growth in Industry
Bank lending to the industrial sector in India has shown a notable shift in focus during the first two months of FY27, with the power sector leading the charge. Gross bank credit to industry increased by Rs 39,599.2 crore, rising from Rs 45.8 lakh crore to Rs 46.2 lakh crore. This growth was primarily driven by the power, chemicals, and vehicles sectors, while lending to telecommunications saw a decline.
Power Sector Leads Growth
The power subsector recorded the largest increase in lending, with outstanding credit rising by Rs 15,399.9 crore, from Rs 8.4 lakh crore to Rs 8.6 lakh crore, marking a growth of 1.8%. Suresh Ganapathy, an analyst with Macquarie, noted that private sector banks have been particularly aggressive in increasing their exposure to the power sector, focusing on public sector power companies like NTPC and PowerGrid, as well as private sector projects. For instance, Axis Bank has reportedly doubled its power sector exposure in the past year.
Ganapathy attributed this trend to improved execution in transmission capacity and a strong push in renewable energy capacity addition. Bankers have indicated that demand in this sector is expected to remain robust, driven by various factors including hot summers and the rise of data centers and electric cooking. Currently, there is no indication of excess supply in the market.
Overall Credit Trends
While bank credit to industry has grown by 17%, outpacing personal loans, which grew by 15.4%, the share of industry in overall bank credit has declined. As of May 2026, this share fell to 22.8%, down from 23.4% in May 2024. The overall infrastructure sector saw a net increase of Rs 14,481.6 crore, with credit rising from Rs 14.9 lakh crore to Rs 15 lakh crore, reflecting a growth of 1%.
The increase in the power subsector outpaced the total growth in infrastructure, largely due to a significant contraction in telecommunications, where credit declined by Rs 10,949.6 crore. Other infrastructure segments also contributed positively, with notable increases in other infrastructure (Rs 5,790.3 crore), roads (Rs 1,851.3 crore), and airports, which recorded a 20.7% increase during the same period.
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