Banks demonstrated a significant recovery in credit growth during the second fortnight of April 2026, with credit offtake jumping by ₹2,95,164 crore compared to a decline of ₹4,56,208 crore in the preceding fortnight, according to RBI data. This represents a substantial turnaround from the substantial decline experienced in the first fortnight of FY27. The recovery was even more pronounced in deposit accumulation, which reached ₹2,12,302 crore against a decline of ₹5,95,607 crore in the previous fortnight.
The current fortnight's performance significantly outpaced the corresponding period last year, with credit growth of ₹2,95,164 crore surpassing the ₹96,509 crore recorded in the same fortnight of the previous year. Similarly, deposit accumulation of ₹2,12,302 crore exceeded the ₹1,68,845 crore recorded in the same period last year, as reported by RBI data. This improvement comes after the typical seasonal decline in outstanding bank credit and deposits that occurs in the first fortnight due to short-term business contraction ahead of financial year-end.
ICRA's recent report projects a more challenging environment for banks in FY27, with credit growth expected to moderate to sub-12% at 11.0-11.7% compared to the significantly high 15.9% achieved in FY26. The rating agency attributes this moderation to India's real GDP growth expected to slow to 6.5% in FY27 from an estimated 7.5% in FY26. ICRA also anticipates slippage rates to rise amid heightened geopolitical uncertainties and evolving interest rate dynamics, with deposit mobilisation at competitive rates remaining a key challenge.
ICRA's analysis suggests that net interest margins (NIMs) will remain under pressure due to the challenging deposit mobilisation environment. The rating agency expects deposit mobilisation at competitive rates to remain a key challenge, with the cost of deposits not expected to decrease materially going forward. This margin pressure is anticipated to impact bank profitability despite the current recovery in credit and deposit growth.
