Negative impactSector
Bank credit growth: Why lending may slow in H2 FY27
Economic Times 2 hrs ago·17 Aug 2026, 8:39 pm
Bank credit growth has recently shown strong momentum, but this pace may not be sustainable in the second half of the fiscal year. A key driver of the recent surge was a favourable base effect, which makes year-on-year comparisons look better. Additionally, banks have been processing loan applications more frequently, such as on a fortnightly basis, which has temporarily boosted disbursements.
For investors, this shift signals a potential cooling in the credit cycle. A slowdown in lending growth could mean that banks might see a dip in their net interest margins, which are the primary source of their profits. It also suggests that the economy's credit appetite is stabilizing after a period of rapid expansion.
Moving forward, investors should monitor the quarterly credit growth data closely. A consistent deceleration could impact the profitability of banking stocks. It is also important to watch for any changes in the central bank's monetary policy, as this could further influence the pace of lending in the coming months.
Excerpt from Economic Times
Published On Aug 18, 2026 at 02:09 AM IST India's bank credit growth could moderate in the second half of FY27 as the favourable base effect normalises and corporates and non-banking financial companies increasingly turn to bonds and other market-based sources of finance. Bank credit growth accelerated to 19.3%…Read the original at Economic Times
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