Indian banks have demonstrated strong momentum in credit growth, with credit growth accelerating to 16% in the fortnight ending April 30, 2026, according to latest Reserve Bank of India data. This represents an increase from 15% credit growth recorded in the previous fortnight. The robust performance comes as total outstanding bank credit reached ₹212.12 lakh crore in April 2026, showing sustained growth from the ₹212.9 lakh crore recorded in March 2026. The Finance Ministry had previously reported this strong credit growth of 15.9% for the full fiscal year 2025-26, with the latest RBI data confirming this momentum continues into the new financial year.
Deposit growth has also shown positive momentum, with deposits growing 12.3% year-on-year in the fortnight ending April 30, up from 12.2% in the previous fortnight. The credit-deposit ratio stood at 82.01% at the end of April 2026, indicating a healthy balance between credit expansion and deposit mobilization. Outstanding deposits in the system reached ₹258.64 lakh crore, providing a strong foundation for continued credit growth. This ratio reflects the banking sector's ability to maintain adequate liquidity while supporting economic growth through credit expansion.
The credit growth was broad-based across sectors, with the services sector leading at 19% year-on-year growth, up from 12% in the previous year. Agriculture and allied activities showed significant acceleration to 15.7% in FY 2025-26, compared to 10.4% a year ago, driven by sustained rural demand and improved credit flow. Industrial credit expanded 15% in FY 2025-26, substantially higher than 8.2% in the previous year, supported by strong MSME lending momentum. Within the industrial segment, micro and small industries registered a strong 33.1% growth, while medium industries recorded a 21.7% rise. The credit expansion was broad-based, led by the services sector, followed by personal loans, agriculture and allied activities, and industry.
The personal loan segment, representing 33% of overall credit, expanded by 16.2% in FY2025-26, significantly higher than the 11.7% growth registered a year ago. Services sector credit, contributing 28% to overall credit, recorded robust expansion of 19% year-on-year, primarily driven by high demand from non-banking financial companies, trade, and commercial real estate segments. The ministry noted that the surge was primarily driven by high demand from these key segments. Housing loans maintained steady growth, while vehicle loans and loans against gold jewellery saw strong demand, contributing to the robust expansion across the personal loans segment.
The Reserve Bank of India has imposed penalties on two financial institutions for regulatory non-compliance. YES Bank received a penalty of ₹31.80 lakh for failing to implement a system using KYC Identifier assigned by Central KYC Records Registry for establishing account-based relationships with customers. The penalty was imposed following a statutory inspection conducted by RBI with reference to the bank's financial position as of March 31, 2025. Additionally, Hinduja Housing Finance Ltd was penalized ₹1.8 lakh for non-compliance with certain RBI directions relating to governance. These regulatory actions highlight the RBI's continued focus on maintaining compliance standards across the financial sector.
