Retail credit growth moderates in August ahead of festival demand

RBI data shows retail credit growth slowed to 11.8% in August from 13.9% a year earlier, with housing, vehicles and credit card loans recording sharper moderation

The pace of credit offtake across segments, including retail, moderated in August 2025 compared to a year earlier, ahead of the festive season. Non-food credit, which covers industry, retail, services and agriculture, expanded by 9.9 per cent year-on-year (Y-o-Y) in the fortnight ended 22 August 2025, against 13.6 per cent growth in the corresponding fortnight of the previous year (ended 23 August 2024), Reserve Bank of India (RBI) data showed.

 

In a statement, the RBI said credit growth in the retail segment — which includes housing, credit cards, vehicles and unsecured loans — decelerated to 11.8 per cent from 13.9 per cent a year ago. The Y-o-Y growth for retail credit was 11.9 per cent in July 2025, 14.7 per cent in June, and 13.7 per cent in May.

 

Housing loans rose 9.7 per cent, down from 13.1 per cent growth in August 2024, while vehicle loans increased 8.7 per cent (14.5 per cent in August 2024). Growth in credit card outstandings also declined sharply to 4.4 per cent, compared with 19.9 per cent Y-o-Y. Similarly, growth in other personal loans slowed to 8.1 per cent from 12.3 per cent a year earlier.

 

Credit to industry rose 6.5 per cent Y-o-Y in August 2025, compared with 9.7 per cent a year ago. Credit to micro, small and medium industries continued to expand at a robust pace, the RBI said.

 

Credit to the services sector grew 10.6 per cent, compared with 13.9 per cent in the corresponding fortnight in August 2024. Growth in bank credit to non-banking financial companies (NBFCs) moderated, while it remained strong in segments such as professional services, computer software, commercial real estate and trade.

 

Credit to agriculture and allied activities grew 7.6 per cent Y-o-Y, compared with 17.7 per cent growth a year earlier.

 

Meanwhile, rating agency CRISIL said in a statement that credit growth is likely to pick up in the second half of FY26, aided by lower interest rates, policy rate reductions, and improved consumption driven by rationalisation of the goods and services tax (GST) rates and income tax cuts.

 

Bank credit, led by the retail sector, is expected to grow 11–12 per cent in FY26, slightly higher than the 11 per cent Y-o-Y growth recorded in the previous fiscal, the agency added.