Large private banks expect credit demand revival in H2FY26

Attribute this to fiscal, monetary measures

- SUBRATA PANDA

Big private banks are noticing green shoots of rising economic activities, evidenced by increasing credit, on the strength of fiscal measures of the central government. They expect fiscal and monetary measures to support stronger loan growth in the second half of FY26 (H2FY26).

According to the latest data from the Reserve Bank of India (RBI), credit growth picked up during the festival season, reaching 11.4 per cent year-on-year (Y-0-Y) in the fortnight ended October 3, while deposit growth stood at 9.9 percent. Between September 20 and October 3, banks disbursed over %3.63 trillion as against 1.02 trillion in the previous fortnight. During the same period, deposits grew %5.51 trillion.

“The triad — tax benefits, the cuts in rates of goods and services tax (GST), and the interest rate cut — seems to be working as we see economic activities improving across customer and product sectors,” said Sashidhar Jagdishan, managing director (MD) and chief executive officer (CEO), HDFC Bank, at the post-earnings media call.

“Against this background, we have an opportunity to activate loan growth, which is what we have started to do from this quarter (Q2FY26). We believe that this will sustain and continue but we have to wait and watch,” Jagdishan said.

In September, the GST Council rationalised rates in various categories to stimulate consumption.