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Bank credit growth accelerated to 17.4% YoY

ICICIdirect Research 12 Jun 2026 DISCLAIMER

News: As per RBI data, Bank credit growth accelerated to 17.4% YoY as of May 31, the strongest pace in nearly two years, with outstanding credit reaching ₹220 lakh crore, driven by higher corporate loan demand as elevated bond yields shifted funding preference toward bank borrowings. Deposits grew at a slower 12.1% YoY to ₹265 lakh crore. Banks’ investment book expanded 5.1% YoY to ₹72 lakh crore, reflecting continued balance sheet growth.

View: The acceleration in system credit growth to a nearly two-year high reflects healthy demand across corporate and retail segments, supporting business growth for banks. However, deposit growth continues to trail credit expansion, keeping liabilities mobilisation competitive and funding costs elevated. The recent RBI measures to incentivise FCNR(B) deposit mobilisation could provide incremental support to banks’ liability franchise and ease funding pressures over the coming quarters, although the pace of inflows will remain a key monitorable

Impact: Positive

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