India's credit growth is projected to rise to 12% in 2026, driven by consumption and policy support, with continued expansion expected in 2027.

India's credit growth is projected to reach 12% in fiscal year 2026 and rise to 13% in 2027, driven by stronger consumption following GST cuts and supportive policies like a 100-basis-point CRR reduction. Credit growth rebounded to 11.7% year-on-year by December 2025, up from 8.9% in May, and has stayed above 10% since July. Deposit growth remained stable at around 9.7%–10% annually. Large private banks are expected to grow credit 3–4% quarterly, with mid-sized banks potentially growing faster. Repricing of term deposits may ease funding costs in late 2026, partially offsetting a 25-basis-point repo rate cut. Concerns remain about credit access for small businesses and rural areas, and the widening credit-deposit gap could pressure bank margins.