India’s Scheduled Commercial Banks (SCBs) recorded a significant 15.9% year-on-year growth in non-food credit during the financial year 2025-26. This expansion represents a sharp increase from the 10.9% growth observed in the previous year, highlighting a robust revival in credit demand across major economic sectors. The data, released by the Ministry of Finance, underscores the broad-based nature of this growth, with the services and industrial sectors leading the surge.
Understanding Non-Food Credit Growth in FY26
Non-food credit refers to the total amount of loans and advances provided by banks to all sectors of the economy, excluding credit extended for the procurement of food grains by government agencies like the Food Corporation of India (FCI). This metric is a vital indicator of real economic activity, as it reflects the credit appetite of businesses and individuals.
In the financial year ending March 2026, the total outstanding non-food credit reached ₹212.9 lakh crore, marking an absolute increase of approximately ₹29.2 lakh crore over the previous year. This growth of 15.9% is particularly noteworthy as it comes after a relatively modest 10.9% expansion in the previous fiscal year. The increase of 497 basis points (bps), where one basis point equals one-hundredth of a percentage point, signifies a major shift in the credit landscape.
Sector-Wise Performance: A Detailed Breakdown
The expansion in credit was broad-based, with significant acceleration across all major segments of the economy.
Services Sector: The Leading Growth Driver
The services sector emerged as the standout performer in FY26, registering the highest growth rate of 19%. This is a significant jump from the 12% growth recorded in the preceding year. This surge was primarily driven by strong credit demand from Non-Banking Financial Companies (NBFCs), trade, and the commercial real estate segment. The services sector continues to be a major contributor to India’s Gross Domestic Product (GDP), and the accelerated credit flow indicates sustained expansion in business activities and consumer services.
Industrial Revival and MSME Performance
One of the most remarkable trends in the FY26 data is the near-doubling of credit growth in the industrial sector. From a growth rate of 8.2% in FY25, industrial credit expanded by 15% in FY26. This revival was significantly powered by Micro, Small, and Medium Enterprises (MSMEs). Notably, credit to micro and small industries witnessed a substantial 33.1% rise, while medium industries saw a 21.7% increase. Key industrial segments contributing to this growth include infrastructure, basic metals, chemicals, and energy products.
Agriculture and Personal Loan Trends
The agriculture and allied activities sector also showed improved credit uptake, with a growth rate of 15.7% in FY26, up from 10.4% in the previous year. This reflects sustained rural demand and the government’s push for formalizing credit delivery in the farm sector. Additionally, personal loans, which account for about 33% of overall bank credit, grew by 16.2%. This segment was supported by steady momentum in housing, vehicle loans, and loans against gold jewellery.
Strategic Factors Behind the Credit Expansion
Several factors have converged to drive this robust credit expansion in the Indian economy. A major catalyst has been the government’s sustained push for Capital Expenditure (Capex) in infrastructure projects, which has encouraged private sector investment. As the government invests in roads, railways, and energy networks, it creates demand for industrial goods and services, leading to higher borrowing by the private sector.
The health of the banking sector has also been a critical factor. Banks entered the 2025-26 fiscal year with strong balance sheets and significantly lower levels of Non-Performing Assets (NPAs). This improved financial position allowed banks to lend more aggressively to productive sectors. Additionally, the increasing digitalization of the financial system has made credit more accessible. Tools such as digital lending platforms and the use of data analytics for credit assessment have simplified the loan process, particularly for MSMEs and individual borrowers.
What Are Scheduled Commercial Banks?
In the Indian financial system, a Scheduled Commercial Bank (SCB) refers to any bank that is included in the Second Schedule of the Reserve Bank of India Act, 1934. To qualify for this status, a bank must satisfy the RBI that its affairs are not being conducted in a manner detrimental to the interests of its depositors.
These banks are broadly classified into four major categories:
| Category | Description |
|---|---|
| Public Sector Banks | Banks where the majority stake is held by the Government of India. |
| Private Sector Banks | Banks where the majority of equity is held by private shareholders. |
| Foreign Banks | Banks headquartered outside India but operating branches within the country. |
| Regional Rural Banks | Banks established to provide credit and other facilities specifically to small farmers and rural businesses. |
Scheduled status entitles these banks to certain privileges, such as eligibility for loans from the RBI at the bank rate and automatic membership in clearing houses. The non-food credit data provided by the Ministry of Finance covers the lending activities of all these institutions, making it a definitive gauge of the country’s credit health.
Key Takeaways
- Scheduled Commercial Banks (SCBs) recorded a 15.9% year-on-year growth in non-food credit during the financial year 2025-26.
- The credit growth rate saw an increase of 497 basis points (bps) compared to the 10.9% growth recorded in FY25.
- The services sector registered the highest expansion at 19%, followed by the agriculture sector at 15.7%.
- Industrial credit growth nearly doubled, rising from 8.2% in the previous year to 15% in FY26.
- Credit to micro and small industries surged by 33.1%, while medium industries experienced a 21.7% growth.
- Non-food credit includes all bank loans except those provided for the procurement of food grains by government agencies like the FCI.
