Commercial banks demonstrated an acceleration in lending growth, reaching a two-year peak of 18.6% year-on-year (Y-o-Y) for the period ending June 27. At the same time, banks attracted nearly 7 trillion rupees in deposits as lenders intensified efforts to meet quarterly targets.
Financial indicators for the last two weeks
According to the latest data published by the Reserve Bank of India (RBI), in the last two weeks of June, banks disbursed loans worth 3.8 trillion rupees, and deposits increased by 6.97 trillion rupees.
Impact of government programs
A significant part of the lending growth may be attributable to loan disbursements under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, which showed high demand among micro, small, and medium enterprises (MSMEs). The government issued over 140,000 guarantees worth more than 1.55 trillion rupees under ECLGS 5.0, launched in May.
Analysis of lending growth factors
Saurabh Bhalerao, Director and Head of BFSI Research at CareEdge Ratings, noted that lending growth was supported by multiple factors. He suggested that some of the increase is related to disbursements under the ECLGS 5.0 scheme, as well as the fact that yields in the debt market directed infrastructure financing and other corporate borrowings towards banks. Furthermore, the demand for corporate lending contributed to the increase in lending. However, in his opinion, this momentum is likely to weaken as geopolitical tensions decrease and debt market yields ease, making market borrowings more attractive.
Sectoral dynamics and comparison with NBFCs
As of the end of May, sectoral distribution of loans showed broad growth across all segments. Industrial lending grew by 17.5% year-on-year, supported by sustained expansion in micro, small, and medium enterprise lending, as well as in the medium sectors. Service sector lending increased by 20.4% year-on-year, while retail loans grew by 15.4%. Agricultural lending showed a growth of 14.9% during the reporting period.
It is worth noting that bank lending growth outpaced the growth of Non-Banking Financial Companies (NBFCs). If bank lending grew by 17.7% year-on-year by the end of May, the growth of NBFC lending was 14.2% over the same period.
Comparison with the previous period
In March 2026, banks attracted 12.2 trillion rupees in deposits, and loans increased by 5.92 trillion rupees. Deposit growth by the end of March was 13.5% year-on-year. Meanwhile, the gap between lending growth and deposit growth continued to exceed 500 basis points.