Bank Credit Growth Set to Slow Amid Global Turmoil

The domestic ratings agency Icra has projected a slowdown in bank credit growth to fall below 12% for the current financial year, primarily due to geopolitical tensions in West Asia and fluctuating interest rates. This marks a decline from the 15.6% growth experienced in FY26.

Sachin Sachdeva, Icra's sector head, cautioned that ongoing conflicts could impact small businesses and unsecured loans, leading to an uptick in slippages. Credit expansion is set to grow by Rs 25 lakh crore, bringing the total outstanding credit to approximately Rs 237 lakh crore by March 2027.

Despite the pressures of global uncertainties and higher crude oil prices, Icra maintains a 'Stable' outlook for the Indian banking sector in the 2026-27 fiscal year, citing stable profits, manageable asset quality risks, and adequate capitalisation as strong foundations amid the challenging economic climate.