Credit Demand Soars as Policy Eases: Outstanding Bank Credit Surpasses ₹200 Lakh Crore for the First Time on December 31, 2025
As of December 31, 2025, India’s outstanding bank credit has crossed the significant ₹200 lakh crore threshold for the first time. This surge in credit demand highlights a notable shift in investment activity, driven primarily by favorable policy adjustments.
Key Highlights of the Credit Landscape:
– Year-to-Date Growth: Credit growth for the year reached an impressive 11.4%, compared to 8% in the previous year, underscoring a rebound influenced by recent rate cuts.
– Annual Growth Surge: The year-on-year growth of credit demand hit 14.5%, as per data from the Centre for Monitoring Indian Economy (CMIE).
– Investment Proposals Increase: In the first nine months of the financial year, investment proposals rose to ₹26.62 lakh crore, up from ₹23.62 lakh crore the previous year, propelling credit expansion.
– Outstanding Bank Credit Figures: By the end of December, outstanding credit stood at ₹203.2 lakh crore, representing an increase of ₹20.78 lakh crore year-to-date, compared to ₹13.18 lakh crore in the same timeframe last year.
Driving Factors Behind Credit Growth:
– Favorable Policy Changes: The reduction in Goods and Services Tax (GST) and a more accommodating monetary policy have stimulated investment activities.
– Sector-wise Demand: Credit growth has been largely driven by sectors such as auto loans, small and mid-sized companies, finance firms, and home loans.
– RBI’s Intervention: Amidst a previous downturn, the Reserve Bank of India (RBI) took decisive steps—cutting rates and urging banks to rekindle animal spirits among lenders.
Investment Environment Overview:
– The top five sectors—electricity, chemicals, metals, IT, and transportation—are responsible for around 80% of total proposed investments, indicating strong targeted growth areas.
– A Cautious Outlook: While the current growth appears robust, analysts caution about the potential unsustainability of the 14.5% growth rate due to base effects from previous years.
Conclusion: A Positive Trend in Credit Demand
The significant increase in credit is a clear indicator of a positive shift in the investment landscape, spurred by policy adjustments aimed at fostering economic growth. If these conditions persist, credit growth may exceed forecasts from Care Ratings and Icra, highlighting an encouraging outlook for businesses and consumers alike. As we move forward, sustained credit demand will play a crucial role in shaping India’s economic trajectory.