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    Credit growth surpasses deposits in early September, retail loans to drive FY26 expansion

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    By Alekh Angre

    Copyright indiatimes

    Credit growth surpasses deposits in early September, retail loans to drive FY26 expansion

    Credit growth in the banking system outpaced deposit growth in the fortnight ending September 5, but still trailed the pace of expansion in the corresponding period last year.Data published by the central bank Thursday showed credit growth stood at 10.3% YoY, higher than the deposit growth of 9.8% YoY.Loan growth moved above 10% in late July but it has remained low compared to 13-14% growth reported in the same period last year. Meanwhile, deposit growth has dropped below 10% for the first time since the end of May 2025, Reserve Bank of India (RBI) data showed.According to CareEdge Ratings, the slowdown reflects both softer momentum and a high base effect.“The moderation was partly driven by muted private sector capex, slower lending to corporates and unsecured personal loans, along with weaker credit flow to NBFCs,” it said.Live EventsLenders are gearing for the pickup in credit demand, particularly in the retail segment, in the festival season. Combination of easy liquidity conditions coupled with government’s steps such as GST rate cuts is expected to boost consumption, thereby pushing credit demand in the second half of the financial year starting October.CRISIL Ratings peg credit growth in the banking system at 11-12% for FY26. Retail credit, which comprises roughly one-third of bank loans, is expected to grow higher at ~13% this fiscal from ~11.7% last fiscal.“The better performance of newer unsecured portfolios, which have benefited from stricter underwriting standards introduced by lenders, should be a growth positive. Home loans remain the largest constituent of retail credit (>50%) and growth here will benefit from lower interest rates,” it said in a note dated September 15.Add as a Reliable and Trusted News Source Add Now!
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    (You can now subscribe to our Economic Times WhatsApp channel)Read More News oncredit growthretail loansdeposit growthbanking systemFY26 expansion(Catch all the Business News, Breaking News, Budget 2025 Events and Latest News Updates on The Economic Times.) Subscribe to The Economic Times Prime and read the ET ePaper online….moreless

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