Bank credit growth at two-year high at 18.6% as debt market turns costlier

Indian bank credit growth hit a two-year high of 18.6% YoY in the fortnight ended June 30, driven by sustained demand from both consumer and corporate segments as rising bond yields pushed borrowers toward bank funding. Deposits grew 12% during the same period, widening the credit-deposit gap to 570 basis points from 530 bps previously. CareEdge Ratings expects credit growth to remain healthy in FY27, supported by improving liquidity, sustained government capex, and steady domestic economic activity.