Financial resources to the commercial sector experienced unprecedented growth in the first four months of FY27, with total flow reaching ₹10.65 trillion. According to RBI data reported by Business Standard, this represents a dramatic surge of 2.38 times compared to ₹4.48 trillion in the corresponding period of the previous year. The robust credit growth has been the primary driver behind this substantial increase in financial resource allocation to the commercial sector, with total outstanding credit from bank and non-bank sources standing at ₹323.14 trillion as of July 31, up 17.4% year-on-year. As per Business Standard, this growth has been broad-based across segments, whether retail or corporate, and across infrastructure sectors as well.
The most significant component of this growth was the non-food credit segment, which witnessed exceptional expansion. According to Business Standard, non-food bank credit flows stood at ₹6.69 trillion during April-July FY27, sharply higher than ₹0.73 trillion in the year-ago period. This dramatic increase in non-food credit demonstrates the strong demand for commercial lending across various sectors and the banking system's ability to meet this growing credit requirement. The surge was particularly notable in infrastructure, engineering, food processing, textiles, construction, basic metals and metal products, petroleum, coal products and nuclear fuels, and chemicals sectors, which recorded buoyant year-on-year growth.
Scheduled commercial banks demonstrated strong performance metrics during this period. According to the RBI's latest monthly bulletin, credit to the agriculture sector accelerated with advances to agriculture and allied activities registering year-on-year growth of 16.8% in June, compared with 6.8% a year ago. Similarly, credit to the personal loans segment grew 15.8% in June, compared with 11.7% year ago. All three industry categories — micro and small, medium, and large industries — displayed broad-based expansion, with banks increasingly focusing on MSMEs and secured retail loans, with gold and vehicle loans witnessing growth. As per Business Standard, banks are seeking to maintain yields amid pressure on funding costs, with housing credit relatively slower amid yield pressures.
The banking sector's robust performance was broad-based across major economic sectors. According to the latest RBI data, credit to the agriculture sector accelerated during June 2026, while industrial credit growth sustained its momentum aided by expansion in credit to large industries. Personal loans picked up in June, supported by housing loans and loans against gold jewellery, indicating diversified credit demand across different consumer segments. Credit to the services sector also strengthened, driven by non-banking financial companies, trade, and commercial real estate. Among major industries, credit to infrastructure, engineering, food processing, textiles, construction, basic metals and metal products, petroleum, coal products and nuclear fuels, and chemicals recorded buoyant year-on-year growth.
Financial resources from non-bank sources also contributed significantly to the overall growth, with foreign sources showing particularly strong performance. According to Business Standard, funding from non-bank sources rose to ₹3.96 trillion during April-July FY27 from ₹3.76 trillion a year ago, while funding from foreign sources increased to ₹2.08 trillion from ₹1.39 trillion. Analysts attributed the increase in foreign funding to recent RBI measures on external commercial borrowings (ECBs) and overseas borrowing. Saurabh Bhalerao from CareEdge Ratings noted that foreign sources likely grew on account of foreign direct investment, highlighting the comprehensive nature of credit expansion across various financial intermediaries in the current financial year.
