Services sector credit growth rises to 19% in FY26, gains sharply from 12% last year

The Financial year 2025-26 ended with robust year-on-year (y-o-y) non-food credit growth of 15.9%, marking a significant 497 basis points (bps) increase in growth from the corresponding period in 2025 (10.9%). The aggregate credit outstanding in Mar-2026 reached Rs 212.9 lakh crore, Rs 29.2 lakh crore higher than the previous year. Amidst a low-interest rate environment, Government aided Capex cycle supported by timely structural reforms, private investments are crowding-in and boosting domestic credit demand, reinstating confidence among corporate as well as individual borrowers on Indian economy. Credit growth in FY 2025-26 has been broad-based led by services sector, followed by personal loan segment, agriculture and allied activities, and industry.

Agriculture and Allied Activities credit growth accelerated to 15.7%, 528 bps higher than 10.4% growth registered previous year, reflecting reinforced support for the farm sector. Sustained rural demand and formalization of rural credit has been attributing to the positive momentum in primary sector credit offtake in FY2025-26.

Industrial Sector credit deployment expanded at almost double rate to 15.0%, vis-à-vis 8.2% growth registered last year. With a 33.1% y-o-y growth, ‘Micro and Small’ industries registered a 3.7 times higher credit growth in FY2025-26. Similar positive trends are witnessed for medium-scale industries where credit expanded by 21.7% y-o-y. Key drivers of industrial credit are: Infrastructure, Basic Metal and Metal Products, Chemicals and Chemical Products, Petroleum, Coal Products, and Nuclear Fuels etc.

Services sector credit, that contributes 28% to the overall credit, recorded a robust expansion of 19.0% y-o-y (compared to 12.0% recorded during the same period last year). The surge was primarily driven by high demand from segments like Non-Banking Financial Companies, trade, and commercial real estate.

The personal loan segment with 33% share in overall credit, expanded by 16.2% in FY 2025-26, 455 bps higher than credit growth (11.7%) registered a year ago. Growth remained steady in the housing segment, while vehicle loans and loans against gold jewellery continued to show strong momentum.

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