Corporate Credit Drives India’s Bank Credit Growth in July 2026

Non-food credit growth rises to 19.1% in July, supported by stronger industrial, services and personal loan demand.

India’s Bank Credit Growth Remains Strong

India’s bank credit cycle continued its expansion in July 2026, with demand strengthening across major sectors. According to CareEdge, non-food credit growth accelerated to 19.1% year-on-year (y-o-y) in July, compared with 10.0% a year earlier, reflecting sustained economic activity, infrastructure execution, improving liquidity conditions and higher financing requirements across sectors.

Industrial credit recorded a notable improvement, driven particularly by large industries. Credit growth in the large industry segment accelerated to 17.7% y-o-y, compared with 1.6% a year earlier. Services and personal loans also maintained strong momentum, while agricultural credit continued to expand at a healthy pace.

CareEdge expects overall credit demand to remain resilient through FY27, although growth could moderate gradually as large borrowers increasingly diversify their funding sources beyond bank credit. Overall credit growth is projected at 15.0–16.0% in FY27.

Credit Growth Broad-Based Across Major Sectors

Non-food credit increased 19.1% y-o-y in July 2026. Industry credit grew 20.0%, compared with 6.5% a year earlier, while services credit accelerated to 22.9% from 10.2%. Personal loans expanded 16.2%, compared with 11.9% a year earlier.

Agricultural and allied activities also recorded healthy growth of 17.0% y-o-y.

Industrial Credit Gains Momentum

Industrial credit growth accelerated to 20.0% y-o-y in July 2026, supported by broad-based demand across manufacturing and infrastructure-linked industries.

Strong credit growth was recorded in engineering, infrastructure, petroleum products, chemicals, basic metals, automobiles, transport equipment, and gems and jewellery.

Credit growth among micro and small industries moderated as the impact of the revised MSME classification faded. Lending to medium-sized industries, however, remained robust. While MSME credit continued to expand at a healthy pace, incremental lending was increasingly driven by large corporates as favourable base effects for MSMEs weakened.

Large industries increased borrowing amid continued capital expenditure and higher working capital requirements. Elevated input costs, longer operating cycles and geopolitical disruptions in West Asia also contributed to financing requirements.

The industrial credit outlook remains favourable, supported by capacity utilisation, investment activity and working capital demand. However, geopolitical tensions, trade uncertainty and commodity-price volatility could increase pressure on export-oriented sectors through higher costs and supply-chain disruptions.

Infrastructure Credit Remains in Double Digits

Infrastructure credit growth stood at 10.2% y-o-y in July 2026, remaining in double digits despite a sequential moderation.

Credit growth in the power sector reached 21.6%, while ports recorded a sharp 58.4% increase. These gains were partly offset by contractions in roads and telecommunications, which recorded growth of -0.8% and -13.2%, respectively.

Going forward, infrastructure financing demand is expected to receive support from investments in power, renewable energy and logistics. Weakness in roads and telecommunications, however, could constrain overall infrastructure credit growth.

Services Credit Accelerates on NBFC Lending

Services-sector credit growth accelerated to 22.9% y-o-y in July, supported by lending to NBFCs, trade and commercial real estate.

NBFCs remained the largest driver of services-sector credit. Bank credit to NBFCs reached a record Rs 21.3 lakh crore, representing 35.7% y-o-y growth, compared with just 3.0% a year earlier.

The increase represented an incremental rise of approximately Rs 5.6 lakh crore over the previous year. Nearly Rs 1.9 lakh crore, or around one-third of this increase, was absorbed by state-owned public financial institutions.

At the same time, credit growth at NBFCs themselves was around 14.5% y-o-y, considerably below the 35.7% growth in bank lending to the sector. This divergence suggests that NBFCs increasingly substituted market-based funding, including bonds and external commercial borrowings, with domestic bank financing amid relatively favourable liquidity and borrowing conditions.

Other services segments also remained strong. Commercial real estate credit expanded 21.5%, while trade credit grew 19.8%, supported by business activity and working capital requirements.

Credit to computer software surged 43.3%, reflecting investments related to artificial intelligence, cloud infrastructure, digital transformation and global capability centre expansion.

Personal Loans Continue to Grow

Personal loan growth remained resilient at 16.2% y-o-y in July 2026, compared with 11.9% a year earlier.

Housing loans continued to represent the largest component of the personal loan portfolio, although their share moderated marginally. Vehicle loans and gold loans were among the key growth drivers.

Mortgage loan growth stood at 11.3%, while vehicle loan growth accelerated to 18.8%, supported by improved affordability and consumer demand. Credit card loan growth, however, slowed to 2.3%, reflecting continued moderation in unsecured retail lending.

Personal loan growth is expected to remain healthy, supported by housing, vehicle and gold loans. Growth could gradually normalise as favourable base effects weaken. Banks are also expected to remain cautious toward unsecured lending, particularly credit cards, with continued emphasis on asset quality and prudent underwriting.

Gold Loans Remain the Fastest-Growing Retail Segment

Gold loans recorded exceptionally strong growth of 88.1% y-o-y in July 2026, although the pace continued to moderate from the exceptionally high levels recorded during the previous year.

Growth was supported by elevated gold prices, demand for collateral-backed borrowing and the reclassification of certain agricultural gold loans into the gold loan category.

Gold loans therefore remained the fastest-growing segment within retail credit and continued to increase their share of the personal loan portfolio.

CareEdge expects gold loan growth to remain robust, supported by elevated gold prices, improving liquidity conditions and continued demand from households and small businesses for secured credit. However, growth is likely to moderate further as base effects normalise.

Credit Outlook for FY27

Bank credit growth remained strong and broad-based in July 2026, with non-food credit expanding 19.1% y-o-y.

Underlying credit demand is expected to remain resilient, supported by economic growth, infrastructure spending and continued capital expenditure. However, overall credit growth is likely to moderate towards 15–16% in FY27 as NBFCs and corporates increasingly diversify funding through bond markets and overseas borrowings.

Geopolitical risks, commodity-price volatility and global trade uncertainty remain key concerns. At the same time, healthy balance sheets, prudent underwriting and policy support are expected to support asset quality and medium-term credit growth.