A recent Ficci-IBA survey forecasts a steady 9-13 per cent industrial credit growth for the Indian banking sector in the first half of 2026, propelled by a revival in capital expenditure, significant infrastructure development, and a broad recovery in sectoral demand.
Key Points
- The Indian banking sector anticipates 9-13 per cent industrial credit growth in January-June 2026, driven by capital expenditure and infrastructure.
- Public-sector banks show strong confidence for higher growth, supported by improved asset quality and capital buffers.
- Infrastructure, metals, real estate, and construction are expected to see high demand for term loans.
- Commercial real estate, NBFCs, and tourism are projected to lead term loan demand in the services sector.
- Textiles, auto components, and pharmaceuticals are expected to drive working capital loan demand.
The Indian banking sector is likely to see 9-13 per cent industrial credit growth in the January-June period of 2026, according to the Federation of Indian Chambers of Commerce and Industry-Indian Banks’ Association (Ficci-IBA) survey.
However, industrial credit is not expected to see sharp acceleration.
Instead, there will be a steady and gradual expansion, likely to be supported by the ongoing revival in capital expenditure, infrastructure push, and sectoral demand recovery.
Sectoral Growth Expectations
Out of the different banks, the industrial credit of small finance banks and cooperative banks largely are expected to have around 7-9 per cent credit growth, reflecting relatively conservative expansion expectations.
Public-sector banks display stronger confidence, with expectations skewed toward higher growth bands, reflecting optimism anchored by improved asset quality, strengthened capital buffers, and continued traction in corporate lending, particularly amid signs of capex revival.
The industrial credit outlook shows a more diversified distribution of responses, though the majority is concentrated in the 11-13 per cent and above 13 per cent growth bands, indicating a selective but growth-oriented approach, with a calibrated stance toward corporate lending and risk management.
For foreign banks, growth is expected to be in the 11-13 per cent range reflecting moderate optimism largely shaped by global liquidity conditions, capital allocation priorities, and selective participation in domestic corporate credit markets.
“Segment-wise responses indicate clear variation in expectations across bank categories.
"Small Finance Banks and Cooperative Banks are largely clustered in the 7-9 per cent growth range, reflecting relatively conservative outlooks on industrial credit expansion, possibly due to limited exposure to large industrial borrowers and a stronger orientation toward retail and MSME lending,” the survey said.
Demand for Term and Working Capital Loans
Among the sectors, survey responses indicate a strongly optimistic outlook for retail loan growth, with expectations heavily skewed toward high double-digit expansion.
Agriculture and allied sector credit growth is expected to see around 9-13 per cent growth in the January-June period of 2026.
According to the responses, infrastructure (including power, roads, and telecom) is expected to witness high growth in demand for term loans over the next six months, followed by metals, iron and steel, real estate and construction.
Auto and auto components, pharmaceuticals, textiles, and engineering goods, also feature prominently among the top sectors anticipated to see increased borrowing activity.
Other sectors such as chemicals (excluding pharma), leather and leather products, and rubber and plastics received comparatively fewer mentions.
In addition, respondents highlighted power, ports, defence, and data centres as other key sectors with expected high growth in demand for term loan over the next six months.
The outlook for term loan demand in the next six months appears capex-heavy and infrastructure-led, with strong support from real estate and manufacturing-linked sectors.
The responses reflect optimism around investment-led growth rather than consumption-driven sectors.
Services Sector Outlook
The demand for working capital loan is expected to witness high growth from textiles in January-June 2026.
This will be followed by demand from auto and auto components and pharmaceuticals, along with engineering goods and the food processing sector.
Commercial real estate is expected to see high growth in term loan demand over the next six months, receiving the maximum number of mentions.
This is followed by non-banking financial companies (NBFCs) and tourism, hotels and restaurants, which are tied as the next most cited sectors.
Shipping and aviation also feature prominently among the leading sectors anticipated to witness increased borrowing activity.
The responses indicate that trade (wholesale & retail) is expected to witness high growth in working capital loan demand over the next six months.
This is followed by transport operators and tourism, hotels and restaurants, which also received strong mentions.
NBFCs and professional services complete the top five services sectors anticipated to see increased demand for working capital financing.
“The outlook suggests that term loan demand in services will be asset-heavy and expansion-driven, led by commercial real estate and financial intermediation (NBFCs), with continued recovery momentum in tourism and logistics-linked sectors.
"Asset-light service industries, by contrast, show limited near-term capex demand,” the Ficci-IBA survey said.
