India's banking sector remains resilient in the backdrop of heightened geopolitical uncertainties, with a majority of bankers anticipating a non-food credit growth of 11-13 per cent during January-June 2026, according to the FICCI-IBA Bankers' Survey unveiled on Sunday.
The outlook is supported by improving balance sheets, steady economic activity, sustained demand across multiple segments of the economy with robust retail and SME credit momentum, and early signs of revival in private capital expenditure.
In contrast, industrial credit growth is expected to expand at a more measured pace, reflecting a gradual recovery rather than a sharp acceleration.
1 April 2026
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The outlook suggests steady investment activity led by infrastructure development, manufacturing-linked sectors, and government-led capital expenditure. Term loan demand is expected to be largely driven by infrastructure, real estate, auto and auto components, pharmaceuticals, and emerging sectors such as data centres and defence-related industries.
Most respondents expect the current monetary policy stance to remain broadly stable in the coming months, indicating a view that the existing policy framework remains appropriately calibrated to balance growth and inflation considerations, FICCI stated.
While Artificial Intelligence is perceived as the most disruptive development likely to reshape banking operations, cybersecurity risk is seen as most pressing challenge confronting banks.
The survey highlights growing prominence of sustainable finance opportunities, with renewable energy financing emerging as segment with strongest growth potential.
"The aggregate distribution of responses indicates that 46 per cent of participants expect overall non-food credit growth in the 11-13 per cent range, making it the dominant view. A further 29 per cent anticipate growth above 13 per cent, while 17 per cent expect growth in the 9-11 per cent range.
"Only 8 per cent of respondents foresee growth below 9 per cent, evenly split between the 5-7 per cent and 7-9 per cent categories," noted the survey.
Foreign banks predominantly expect growth in the 11-13 per cent range, with a smaller proportion indicating 7-9 per cent growth.
This reflects moderate optimism, largely shaped by global liquidity conditions, capital allocation priorities, and selective participation in domestic corporate credit markets.
The twenty-first round of the FICCI-IBA Bankers' Survey captures industry sentiment for the outlook period January to June 2026.
A total of 24 lenders, comprising public sector banks, private sector banks, foreign banks, small finance banks, and cooperative banks, participated in this round. The survey was conducted in January-February, 2026.
Expectations regarding overall credit expansion remain positive, with banks anticipating continued momentum in non-food credit, FICCI stated.
Public sector banks appear particularly confident in the outlook, reflecting improved asset quality, stronger capital positions, and increasing traction in corporate lending.
Sectorally, credit demand from services and retail segments is expected to remain a key driver of overall lending growth.
The services sector outlook reflects strong expectations of expansion, supported by activity in real estate, financial services, logistics, and tourism-related industries. Retail lending is also projected to remain robust, reinforcing its role as a central pillar of banking sector growth.
SME credit demand is expected to remain particularly strong, with respondents expressing high confidence in continued expansion in this segment. This reflects improving business activity among smaller enterprises, increased formalisation of credit channels, and continued policy emphasis on supporting MSME growth.
Sectors such as textiles, automobiles, pharmaceuticals, engineering goods, and food processing are expected to drive industrial working capital borrowing, it added.
