The share of business credit in total bank loans has risen notably in the fiscal year 2026, with loans to the private corporate sector growing by 15.5% from 11.9% a year ago, according to the Reserve Bank of India's (RBI) annual Basic Statistical Returns. This increase highlights a broader expansion across sectors and geographies, as overall bank credit growth accelerated to 14.1% year-on-year by the end of March 2026.
Deposit Growth and Composition
Deposit growth also saw an uptick, accelerating to 11.5% from 10.6% a year earlier. This growth was observed across all population groups, with a notable shift in deposit composition. The share of savings deposits declined to 28.7% from 34.6% in March 2022, while term deposits increased to 61.6% from 55.2%.
| Deposit Type | March 2022 | March 2026 |
|---|---|---|
| Savings | 34.6% | 28.7% |
| Term | 55.2% | 61.6% |
Interest Rate Trends
The share of loans bearing interest rates of less than 9% rose to 64.2% from 43.9%, aligning with monetary policy actions during FY 2025-26. Similarly, the share of term deposits with interest rates below 7% increased to 61.8% from 27.3%.
"The shift towards lower interest rates on loans and deposits reflects the central bank's accommodative stance, which has implications for trade finance costs," noted Dr. Anjali Verma, economist at Kotak Mahindra Bank.
Implications for Trade Finance
The increase in business credit share and the shift towards lower interest rates are likely to reduce the cost of capital for trade finance, enhancing export competitiveness. Companies in the automotive and parts sector, in particular, could benefit from more accessible financing options, facilitating international trade expansion.
Expert Insights
Rajesh Kumar, Chief Economist at ICICI Bank, commented, "The growth in corporate sector loans indicates a robust demand for business expansion, which is crucial for sustaining economic growth. The favorable interest rate environment further supports this trend."
Overall, the developments in FY26 suggest a positive outlook for businesses seeking to leverage bank credit for growth, with implications for trade finance and international competitiveness.
