loader2
Login Open ICICI 3-in-1 Account
Open ICICI 3-in-1 Account

Open ICICI
3-in-1 Account

Manage your Savings, Demat and Trading Account conveniently at one place

+91

BLOG

Credit momentum builds: Retail revival and infra boost ahead in H2FY26

ICICIdirect Research 19 Sep 2025 DISCLAIMER

After reporting healthy credit growth in previous couple of fiscals, credit off-take witnessed slower traction in current fiscal led by muted demand, caution on the part of lenders in certain segments and focus on liabilities accretion. Thus, credit growth has been largely lagging behind deposit growth since the beginning of current fiscal.
However, for the fortnight ended 5 September 2025, banking industry has reported credit off-take at 10.3% YoY, surpassing deposit accretion which was reported at 9.8%. Taking cues from this, we anticipate healthy revival in credit demand in 2HFY26, largely from consumption led retail segment while gradual uptick is expected in the infrastructure sector.
As estimated by NITI Aayog and the World Bank, infrastructure investment required by India stands at $4.5 trillion by 2030. The report also highlights need to diversify financing sources beyond traditional bank lending. Currently, infrastructure financing remains dependent on banks and NBFCs due to high leverage, low credit ratings, and long project tenors, which limit access to broader capital markets.
NaBFID (National Bank for Financing Infrastructure and Development) is emerging as a key enabler to overcome these challenges by making long-gestation projects more bankable. Through strategic partnerships and innovative mechanisms like partial credit enhancement facilities, NaBFID is mobilizing investments from large pools of pension and insurance funds (around ₹110-115 lakh crore) enhancing accessibility to funding sources, aiming sustainable, long-term infrastructure funding across India. Government measures in terms of making NPS attractive for private sector corporate employees is a step in that direction.
Additionally, RBI’s decision to ease infrastructure provisioning norms—reducing requirements from earlier proposed 5% to just 1–1.25% effective October 1—marks a clarity, providing boost for long-tenure lending. The move not only strengthens lenders’ confidence to fund large projects but also sets the stage for a revival in infrastructure credit, which was muted at 1.4% in FY25 and 1.9% from April- July’25. With this regulatory relief, infra lending is poised to see a meaningful pickup in the coming months, supporting broader investment activity.
Anticipated sustained growth in power financing and diversification in infrastructure space makes PFC, REC, IREDA lucrative. HUDCO, being urban infrastructure financier, is well poised to deliver healthy growth in coming fiscals. Among banks, PSU banks are well placed owing to relative higher traction in infrastructure lending, though SBI remain preferred pick among the peers.

Also explore more on Research page

Download ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere

Play Store App Store
market app

Download ICICI Direct app

Invest, Track, and Manage your Portfolio Anytime, Anywhere

Play Store App Store
market app
✕
Application status