Non-food bank credit demonstrated robust growth momentum in May 2026, rising 17.4 per cent year-on-year to ₹213.79 trillion compared to ₹182.17 trillion in the previous year, according to data from the Reserve Bank of India's June Bulletin. This growth rate significantly outpaced the 13.6 per cent increase in non-bank funding sources to ₹102.24 trillion from ₹89.99 trillion during the same period. The stronger performance in bank-sourced funding contributed to total credit to the commercial sector reaching ₹316.04 trillion as of May 31, 2026, representing a 16.1 per cent year-on-year increase from ₹272.16 trillion a year ago. As per Vietnam Report, banks remain the economy's primary funding artery just as the battle for deposits intensifies, with credit growth considerably outpacing traditional deposit growth, pushing loan-to-deposit ratios steadily higher.
Within non-bank funding sources, domestic funding stood at ₹75.80 trillion, up 12.8 per cent from the previous year, while foreign sources rose 16.2 per cent to ₹26.45 trillion. For the first two months of FY27, non-bank sources mobilised ₹1.94 trillion, slightly higher than ₹1.90 trillion in the corresponding period last year. The composition of non-bank funding shifted toward overseas sources, with domestic sources contributing ₹0.80 trillion up to May 31, 2026, compared with ₹1.27 trillion a year ago, while foreign sources rose to ₹1.14 trillion from ₹0.63 trillion. Non-food bank credit recorded a flow of ₹0.88 trillion during the period, against a contraction of ₹1.55 trillion in the year-ago period.
For the full financial year 2026, non-bank sources mobilised ₹17.69 trillion, marginally lower than ₹18.15 trillion in FY25. Domestic sources declined to ₹12.66 trillion from ₹14.91 trillion, while foreign sources increased to ₹5.03 trillion from ₹3.25 trillion. Overall, the total flow of financial resources to the commercial sector rose to ₹46.88 trillion in FY26 from ₹36.23 trillion in FY25. Non-food bank credit accounted for ₹29.19 trillion of the total flow, up from ₹18.08 trillion in the previous financial year, demonstrating the continued preference for bank-sourced funding in the commercial sector. According to Vietnam Report, the banking sector is navigating an environment of striking growth opportunities and persistent headwinds such as geopolitical uncertainty, energy price swings, rising trade protectionism, and monetary policy shifts in major economies.
The State Bank of Vietnam is fast-tracking its path to Basel III in 2026 through a draft circular set to replace existing prudential ratios and operational safety limits, aiming to pivot the industry away from scale-driven expansion toward stronger capital quality and risk management. Meanwhile, banks are increasingly prioritising customer engagement over purely financial narratives, with Vietnam Report's media coding analysis showing the share of news related to 'Customer Relations' climbed from 2.3 per cent in 2022 to 5.5 per cent in 2025 and held at 5.2 per cent during the first four months of 2026. A Vietnam Report survey indicates that beyond data security, transparency and privacy cited by 89.5 per cent of respondents, customer experience factors are gaining ground, with product and service quality flagged by 54.3 per cent, customer service quality by 48.1 per cent, and staff professionalism by 46.2 per cent.
