Why Banks Are Confident About Credit Growth in H2FY26 Despite Global Challenges

The banking sector’s optimism about credit growth in H2FY26 comes at a time when global uncertainties could have dampened sentiment. Yet, Indian banks are betting big on the resilience of domestic demand, particularly during the festive season, which historically brings a surge in consumer spending. From home appliances to automobiles, the festival months have always been a hotspot for credit card usage and personal loan disbursements. Interestingly, this year’s growth story isn’t just about consumer loans. Corporate demand for credit, especially in sectors like infrastructure, real estate, and MSMEs, is also expected to rise. Government policies encouraging capex and ongoing housing demand in urban centers are giving banks a reason to remain bullish. One key driver is digital banking adoption, which has simplified how consumers and businesses access loans. Faster processing times, instant credit approvals, and better customer engagement tools mean that people are more willing than ever to borrow. This is especially significant during the festive rush, where speed and convenience play a huge role in consumer decision-making. In a broader sense, banks’ outlook shows confidence in India’s economic fundamentals. Even as tariff uncertainties with the US may weigh on export-driven sectors, domestic consumption is proving to be the stronger buffer. The festive cheer, combined with steady government spending, could help the banking sector hit the 10-12% growth target comfortably.