According to the FICCI-IBA Bankers’ Survey for January–June 2026, Indian banks anticipate resilient credit growth between 11% and 13%.
Indian Banks Forecast Robust H1 2026: Retail and SME Credit to Drive Double-Digit Loan Growth
India’s banks expect loan growth to remain strong in the first half of 2026, helped by steady economic conditions and healthy balance sheets, according to the latest FICCI-IBA Bankers’ Survey. The survey, which gathered responses from 24 banks across public, private, foreign, small finance and cooperative segments, covers the outlook from January to June and was conducted at a time when the macro economic outlook was different.
With inflation under control and economic growth holding firm, most bankers believe the environment remains supportive. The survey was conducted when India’s economy was on a strong footing, with inflation at around 2.75% in January and GDP growth of about 7.8% in the third quarter of FY26.
On interest rates, the majority expect no change in the coming months. Most banks feel the current policy setting is appropriate. A few private banks see a small chance of a rate cut, while cooperative banks expect a hike.
Loan growth is expected to stay in double digits. Nearly half of the banks see non-food credit growing between 11-13%, while many expect it to grow even faster. Public sector banks (PSBs) are among the most confident, pointing to better asset quality and stronger capital levels. Private banks expect steady growth, led by retail and small business loans.
Foreign banks see moderate but stable expansion. Retail lending is expected to remain the biggest driver of loan growth. More than half of the banks surveyed expect retail loans to grow above 13%. None see growth falling below 9%. Loans to small and medium enterprises (SMEs) are also expected to remain strong, supported by improving business activity.
Industrial lending is likely to grow at a steady pace, mostly in the 9-13% range. Banks expect demand for long-term loans to be led by infrastructure, real estate, metals, automobiles and pharmaceuticals. Sectors such as data centres and defence are also expected to see higher borrowing. Demand for working capital loans is likely to follow business cycles. In manufacturing, textiles, auto components and engineering goods are expected to see higher short-term borrowing. In services, wholesale and retail trade, transport and hospitality are expected to drive demand.
The services sector overall is seen as a key growth area, with strong demand from commercial real estate, non-banking finance companies, tourism and aviation. Agriculture lending is also expected to grow at a steady pace. Beyond loan growth, banks are sharpening their focus on climate risk and financial inclusion. These have emerged as top priorities for 2026. At the same time, banks continue to focus on maintaining asset quality and supporting growth.
Technology is expected to reshape banking operations. Many bankers say artificial intelligence will have the biggest impact, especially in loan approvals and collections. Renewable energy financing is seen as the biggest opportunity in sustainable lending. However, cybersecurity remains the top concern. As banking becomes more digital, protecting systems and customer data is seen as the biggest challenge ahead.
As per the survey, 71% respondents consider cybersecurity risk as the most challenging risk category currently facing banks. In comparison, operational risk (13%) ranks a distant second, followed by liquidity risk (8%), while both market risk (4%) and credit risk (4%) are perceived as relatively less challenging at present.
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