Banks experienced a notable reversal in lending trends during the June quarter, with retail loan growth slowing to 7-12% year-on-year at most large banks, according to reports from Mint. State Bank of India was the notable outlier with 15% growth, while Axis Bank reported the highest corporate loan growth of 38%. The deceleration was largely attributed to normalization in unsecured loan growth and slowdowns in secured segments such as vehicle and housing loans. As per Mint, SBI chairman C.S. Setty acknowledged that housing sector growth was 'slightly slower in Q1' than expected, despite gaining market share, while auto loan growth slowed due to lender caution amid aggressive pricing in the segment.
Corporate lending demonstrated strong performance with growth of 10-18% across banks, as reported by Mint. Axis Bank led with 38% growth, while Bank of Baroda and Indian Bank saw retail loan growth outpace corporate loans, largely driven by surging gold loans. Banks attributed the corporate loan momentum to increased demand from sectors including renewables, power, and data centres. The brokerage Kotak Institutional Equities noted that loan growth in the corporate sector saw a few one-off factors, probably led by higher drawdowns due to current geopolitical tension which required corporates to keep excess buffer in their balance sheets. Some banks also noted slower agriculture loan growth due to cyclical trends, with lending typically higher in second and fourth quarters aligned with sowing seasons.
According to Mint reports, SBI chairman C.S. Setty said in the post-Q1 earnings conference on 7 August that 'We were not too happy with the pricing on these auto loans. Many people are aggressively pricing, and we will be really figuring out our strategy in terms of what we need to do on auto loans.' Axis Bank executive director Subrat Mohanty noted that retail disbursement growth over the last three quarters has been at about 18%, which should translate to book growth gradually. The brokerage Kotak Institutional Equities reported that industry retail loan growth picked up to 16% as of June 2026, with unsecured segments declining at -1% and 2% year-on-year respectively. Some banks, such as HDFC Bank and Axis Bank, reported a slowdown in unsecured retail loans but said that disbursements have started picking up and should help grow the book over the next few quarters.
As reported by Mint, system-level data from the Reserve Bank of India showed bank credit to industry rose 19.2% year-on-year as of 30 June 2026, while retail loans grew 11.7%. The brokerage noted that even as corporate loan growth reached around 20% year-on-year, most large private banks remain comfortable with this segment growth. Kotak Institutional Equities highlighted that loans against gold grew at around 100% year-on-year, representing the fastest growing segment for the banking sector. The brokerage also noted that the unsecured segments, including consumer durable financing and credit cards, have slowed down at -1% and 2% on-year, while the segment that is growing very strongly is loans against gold.
