India’s Bank Credit Growth Pegged At 14% For FY27; Pace Likely To Ease In H2: HSBC Report

New Delhi, Aug 7 (KNN) India’s bank credit growth is expected to remain robust at around 14 per cent in FY27, according to a report by HSBC Global Investment Research. 

The report noted that several banks reported strong loan growth in the first quarter, with management indicating stable asset quality across segments, ANI reported.

“The recently announced Emergency Credit Line Guarantee Scheme (ECLGS) should also provide incremental support,” it added.

Corporate Lending Drives Growth

Corporate credit has emerged as a key driver, growing 20.4 per cent year-on-year in June, up from 18.9 per cent in May. The increase was attributed to a shift in corporate borrowing from bond markets to banks, higher working capital requirements, and increased lending to non-banking financial companies (NBFCs).

Overall non-food credit growth rose to 18.3 per cent year-on-year and 2.0 per cent month-on-month in June, compared with 17.3 per cent and 1.2 per cent, respectively, in May.

Broad-Based Expansion Across Segments

Loan growth remained strong across major segments. Retail credit expanded 15.8 per cent year-on-year, with stable growth across housing, vehicle, and unsecured loans.

MSME lending recorded a 20.5 per cent annual increase, while agriculture loans grew 16.8 per cent. Corporate lending also saw a 2.5 per cent month-on-month rise, contributing to overall credit expansion.

Moderation Expected in Second Half

Despite the strong start, HSBC expects loan growth to slow in the second half of FY27 due to a high base effect and a potential moderation in corporate loan demand.

The report revised its FY27 credit growth forecast upward to 14 per cent year-on-year from an earlier estimate of 12 per cent, while noting that current growth levels of around 18 per cent may not be sustained through the year.

(KNN Bureau)