India Sees 15.9% Surge in Non-Food Credit Growth

The financial year 2025-26 concluded with an impressive year-on-year growth of 15.9% in non-food credit, a substantial rise from 10.9% in the previous year. This growth reflects the banking sector’s robust performance, with total credit outstanding reaching ₹212.9 lakh crore by March 2026, up ₹29.2 lakh crore from the previous financial year. Various factors, including supportive government measures, low-interest rates, and increased private investment, have played crucial roles in reinstating confidence among both individual and corporate borrowers in the Indian economy.

Credit growth in FY 2025-26 was not only strong but also broad-based, with significant contributions from various sectors, most notably the services sector, followed by personal loans, agriculture and allied activities, and industrial segments.

Agriculture and Allied Activities

In the agriculture and allied activities sector, credit growth surged to 15.7%, representing a 528 basis points increase from 10.4% in the previous year. This significant growth is indicative of enhanced support for the agricultural sector, driven by sustained rural demand and improvements in formal rural credit processes.

Industrial Sector Growth

The industrial sector experienced remarkable credit deployment, nearly doubling its growth rate to 15.0% compared to 8.2% a year ago. Micro and small industries saw an outstanding 33.1% year-on-year growth in credit, while medium-scale industries benefited from a 21.7% increase. Key sectors driving this industrial credit surge include infrastructure, basic metals, chemicals, petroleum, and nuclear products.

Services Sector Performance

The services sector, accounting for 28% of total credit, reported a robust 19.0% y-o-y expansion, up from 12.0% the previous year. Strong demand from segments such as non-banking financial companies, trade, and commercial real estate fueled this growth.

Personal Loans Segment

Personal loans, which make up 33% of overall credit, increased by 16.2% in FY 2025-26, surpassing the 11.7% growth of the previous year. The housing loan segment remained stable, while vehicle loans and loans against gold displayed significant momentum.

The substantial credit growth underlines a resilient domestic economy with an increasing appetite for credit in various sectors. This growth facilitates corporate and individual investments, driving industrial activity and creating additional employment opportunities.

Despite facing challenges like geo-economic fragmentation and geopolitical pressures globally, the Indian economy has showcased exceptional resilience, consistently ranking as one of the fastest-growing major economies in the world. The banking sector, a vital driver of this growth, remains robust with a well-capitalized balance sheet and low impaired assets, indicating a healthy landscape for further economic expansion.

Continued government efforts in democratizing and formalizing credit provision have resulted in broad-based credit growth across the economy, creating an environment ripe for sustained economic development.

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