Banking sector maintains strongly constructive outlook on credit growth

The twenty-second round of the FICCI-IBA Bankers’ Survey has offered industry sentiment on the banking sector outlook for the period July to December 2026. A total of 22 banks, comprising Public Sector Banks, Private Sector Banks and Foreign Banks, participated in this round. Collectively, these banks account for more than three-fourths of the total banking assets in the country.

The survey was conducted against the backdrop of a resilient Indian economy, with real GDP growth accelerating to 7.8% in Q1 FY2026-27, supported by robust manufacturing and services activity, while real Gross Value Added (GVA) grew by 8.2%. Investment activity also strengthened, with gross fixed capital formation rising by 11.9%, alongside 7.1% growth in private final consumption expenditure.

At the same time, CPI inflation stood at 4.82% in August 2026, with food inflation at 5.95%, an increase from the levels seen earlier. India’s banking sector continues to demonstrate resilience, supported by improved asset quality, stronger capital buffers, sustained retail and SME credit momentum, and emerging signs of a broader revival in private-sector capital expenditure. Against a backdrop of strong domestic growth momentum, evolving inflation dynamics and heightened geopolitical and global trade uncertainties, the survey offers insights into the credit outlook, sectoral credit demand, emerging risk perceptions and the strategic priorities shaping the banking ecosystem during the second half of 2026.

The survey results suggest that the banking sector maintains a strongly constructive outlook on credit growth, underpinned by resilient demand across retail, SME, industrial and services segments, even as banks navigate emerging funding and macroeconomic headwinds. Nearly three-fourths of respondents expect non-food credit to grow in the mid-teens or higher year-on-year over the next six months, and almost all expect at least double-digit growth.

Private Banks are the most optimistic, with nearly nine in ten expecting growth in the mid-teens or higher, followed by Public Sector Banks, where nearly three-fourths hold this view. Foreign Banks present a more measured view, with all respondents expecting growth at a lower double-digit pace, consistent with their more focused exposure to select segments.

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