Mumbai: India is witnessing its strongest phase of credit expansion since 2012 on the back of robust corporate borrowings, a foreign brokerage said on Thursday.Corporate loan growth rose to a 13-year high in May, supported by sustained domestic demand, rising wholesale prices and the Reserve Bank of India‘s (RBI) regulatory easing measures, according to the report by Morgan Stanley.
Large-ticket corporate lending has emerged as the biggest driver of the current upcycle, with loan growth accelerating to 18.3 per cent year-on-year in May, the highest level since 2012, indicating a sharp revival in investment-related borrowing by businesses, the brokerage said.
Also read: India’s private banks draw thinner margins on tepid credit growth
A majority of banks have shown a sharp uptick in corporate credit demand in the April-June period, which is generally a soft quarter. However, in earnings calls, a majority of lenders said the credit growth is coming mainly for working capital and not greenfield or brownfield, which can be classified as investment-led.
Increases in rates in the money markets, which were serving as a cheaper alternative for entities wanting to borrow, have also led to a preference for banks. It can be recalled that many corporates had chosen to turn lean in the face of the Covid-19 pandemic by de-leveraging or paying off their loans. Over the last few years, concerns have been raised about India Inc’s reluctance to invest for growth.
The brokerage report said retail borrowing has also remained resilient.
Household loan growth stayed above 15 per cent year-on-year for the fourth consecutive month, aided by strong housing demand and a recovery in unsecured personal lending growth.
The report noted that the improvement in unsecured lending has been supported by the RBI’s easing of some earlier regulatory tightening measures, which had weighed on personal loan growth.
Non-banking financial companies have also participated strongly in the recovery. Retail loan growth for NBFCs accelerated to 19.5 per cent year-on-year in May, compared with 14.9 per cent in the year-ago month.
The brokerage expects overall credit demand to remain strong in the coming quarters, supported by continued capital expenditure, improving export growth and resilient domestic consumption.
Also read: Credit-deposit gap to persist as loan demand dynamics have changed, says SBI Research
Housing loans are likely to remain a key anchor for household credit growth, while discretionary spending on consumer goods, automobiles and services is expected to provide additional support to retail borrowing.
The report also said that India, Japan, Singapore, Hong Kong, Australia and Taiwan have seen the biggest accelerations in loan growth. Korea has been an exception as corporate capex is largely funded from internal accruals.
Thailand is the only economy in the group that has weak credit growth given an uneven expansion so far, in which households have continued to deliver.
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PTILast Updated: Jul 22, 2026, 07:48:00 PM IST
Godrej Capital acquired Kanakadurga Finance’s gold loan business to expand its consumer finance segment. This acquisition aims to build a Rs 1 lakh crore assets under management franchise by 2031. Kanakadurga Finance’s business adds 54 branches and 250 employees to Godrej Capital. The gold loan segment is experiencing significant growth due to rising gold prices. Godrej Capital also launched its wealth management business earlier this year.
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Mumbai, Godrej Capital, the financial services arm of the Godrej Group, on Wednesday announced the acquisition of the gold loan business of Kanakadurga Finance through its subsidiary Godrej Finance for an undisclosed sum.The maiden acquisition by the company is aimed at strengthening its presence in the consumer finance segment, according to an official statement.
The company said the acquisition aligns with its ambition to build a Rs 1 lakh crore assets under management (AUM) franchise and serve more than one million customers by 2031.
Kanakadurga Finance’s gold loan business has Rs 280 crore AUM with nearly 12,000 customers, 54 operational branches across Andhra Pradesh and an experienced team of around 250 employees, which will help Godrej Capital scale up operations in this vertical.
Currently, the company is primarily engaged in MSME lending and housing finance. It has also established a consumer finance platform focused on long-term growth.
The company said it has built a strong foundation over the past five years through investments in technology, risk management and customer-centric operations and the acquisition will help create a more diversified lending institution.
“The acquisition of Kanakadurga Finance’s gold loan business marks an important milestone in Godrej Capital’s journey and represents our first strategic acquisition as we continue building a larger and more diversified financial services franchise with a five-year ambition of achieving Rs 1 lakh crore AUM,” Manish Shah, managing director and chief executive officer, Godrej Capital, said.
The gold loans segment has been witnessing very high growth in the past few months amid the increase in prices of the precious commodity and also lenders’ comfort because of the secured nature of the product.
Outstanding loans against gold jewellery stood at Rs 3.29 lakh crore at the end of May 2026, up 69.9 per cent from Rs 1.94 lakh crore a year earlier.
This has led to jostling among financiers to enter the fray, with new operations and acquisitions of existing entities.
On July 13, Tata Capital acquired a majority stake in Kerala-based Yogakshemam Loans (Yogloans), marking the Tata Group financial services company’s entry into the gold loan business.
In June, Godrej Capital had launched its wealth management business and set a target of Rs 1 lakh crore over the next five years. The wealth management business will initially focus on eight key cities before expanding to 35 locations over the next three years.
Last month, Shah told PTI that Godrej Capital is targeting assets under management (AUM) of Rs 38,000 crore by the end of the current financial year and plans to take the business public in the next five years.
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