Bank Credit Surges 12% in FY25: RBI

Bank credit in India grew by 12.1% in FY25, slower than the 16.3% growth recorded in FY24 but higher than the 10.3% average over the preceding decade, the Reserve Bank of India (RBI) said on Wednesday. The update was shared by RBI

Governor Sanjay Malhotra during the third bi-monthly monetary policy announcement.

Even as growth in bank lending moderated, the overall flow of financial resources to the economy rose to ₹34.8 lakh crore in FY25—an increase of nearly ₹1 lakh crore over the previous year.

This was supported by increased reliance on non-bank sources such as capital markets and corporate bonds.

In absolute terms, bank credit declined by ₹3.4 lakh crore to nearly ₹18 lakh crore during FY25. According to the RBI, transmission of policy

rates to money markets has been faster, prompting corporates to shift away from banks and increasingly access funds through market-based instruments.

Gopal Jain, MD and CEO of Gaja Alternative Asset Management, said this steady monetary stance supports macroeconomic stability and reinforces investor confidence amid global uncertainty.

The predictable rate environment, he added, is essential for long-term capital deployment.

Karthick Jonagadla, Founder of Quantace Research, observed that the benign credit

costs—following a 100 basis point rate cut this year—have supported sectors like banking, housing, and capex. However, rising core inflation and external trade headwinds could limit the scope for further rate easing.

Despite these shifts, the RBI retained India’s GDP growth forecast for FY26 at 6.5%. Governor Malhotra noted that macroeconomic indicators remain strong and that the banking system continues to be supported by robust liquidity and financial stability.

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