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Bank credit to grow at around 13% in FY27 driven by growth in MSME, retail sectors: Crisil
Apr-08-2026

The rating agency -- Crisil Ratings has said that bank credit is likely to grow by around 13% in this fiscal (FY27), driven by healthy growth in the micro, small and medium enterprise (MSME) and retail sectors, as well as the continued preference of corporates for bank credit rather than issuance of bonds amid the prevailing interest rate differential. It noted that the increased working capital intensity of India Inc is likely to support the bank credit growth, even as a revival in capital expenditure (capex) of the private sector could be delayed. However, it said the growth will be marginally slower than the estimate of about 14% for FY26. It noted that tailwinds from the regulatory and government measures announced in FY26 should sustain and support growth, but the extent of benefit will taper over time and the impact will be seen across sub-segments -- corporate, MSME and retail.

It pointed that the ongoing West Asia conflict would have a dual impact on wholesale credit growth. It said that the associated uncertainties could weigh on a broad-based revival in private sector capex, while the supply-chain disruptions and higher input prices would increase demand for working capital debt in the short term. Further, inflationary pressures from a prolonged West Asia conflict and the resultant higher interest rates could weigh on retail consumption demand. Meanwhile, it said bank credit growth to corporate sector, which accounts for about 36% of domestic bank credit, is likely to grow by 9-10% in FY27, in line with around 10% in FY26. MSME segment, which accounts for around 19% of domestic bank credit, is likely to remain the fastest growing portfolio for the banking sector in FY27. Although, the growth will moderate in from the 24-25% level seen in FY26 as the country’s economic growth tempers.  

It said the retail loan segments which accounts for about 33% of domestic bank credit, is estimated to grow by around 14% in FY27. While this will be lower than the second half of FY26, which benefitted from the immediate impact of regulatory stimuli such as softer interest rates and tax reliefs, it will be only a marginal moderation compared with FY26 overall. It noted that the banks continue to be well-positioned in-home loans, their largest business segment. They will continue to gain share in the prime segment given competitive pricing. Besides, growth in auto loans, which, too, hastened after the rationalisation of the goods and services tax last fiscal, should sustain, while unsecured loans could see moderately higher growth in FY27 as asset quality of newer originations has improved.
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