Bank credit raised by India Inc drops to 22% in Q1FY26, shows data

Corporates increasingly turn to debt capital markets as bank credit share in fundraising hits multi-year low, signalling shift in funding dynamics

The incremental share of bank credit in overall resources being raised by corporations dropped substantially from  44.6 per cent in the financial year 2023 (FY24) to 31.3 per cent in FY25, and further to 22 per cent in Q1FY26, according to a report by SBI Research. 

 

During this time, resources from the debt capital market through corporate bonds and commercial papers (CPs) went up significantly. 

 

In FY24, resources were at 16.5 per cent and 22.2 per cent, respectively, which went up to 18.4 per cent and 27.1 per cent in FY25, and 31.5 per cent and 41.9 per cent in Q1FY26, the report said. This is one of the major reasons why the credit growth in the system has lagged since last year. Latest data showed the pace of bank credit growth inched up to 9.8 per cent year-on-year 

(Y-o-Y) in the fortnight ended July 11, 2025, while deposit growth remained steady at 10.1 per cent Y-o-Y. 

 

During the same period last year, banking system credit grew 14 per cent while deposits increased 11.3 per cent.