BofA India Loan Growth Indicator: Strong growth momentum, but risks skew to downside in 2H

Research evidence excerpt

BofA India Loan Growth Indicator: Strong growth momentum, but risks skew to downside in 2H

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BofA India Loan Growth Indicator

Strong growth momentum, but risks skew

to downside in 2H

Industry Overview

BofA India Loan Growth Indicator – updated till Apr’25 16 June 2026

We update BofA India Loan Growth Indicator for input data available till Apr’25, thus Equity

predicting SCB loan growth till Dec’26 (8M lead). The indicator predicts steady recovery India

in loan growth starting from Feb’26 till Nov’26 with slight moderation in Dec’26. This is Banks

driven by supportive trend across 5 inputs including lower lending rate, improving IIP,

increasing inflation, rising Gsec yield and better M3 growth. While actual growth has

been higher than predicted growth, trending around 16%-17% in last 3M, the direction

has been in line with predicted growth.

Credit growth firm near term; see some downside in 2H

System loan growth accelerated to 18% YoY in May’26 supported by strong demand Madhur Sharma >>

drivers and healthy credit supply. Corporate demand has picked up amid the recent rise ResearchBofAS IndiaAnalyst

in bond yields, moderation in capital market activity and higher working capital +91 22 6632 8945

madhur.sharma2@bofa.com

requirement. Within retail, growth in unsecured remains soft but secured loans including

gold, vehicle, home loans etc continue to see healthy growth. However, we see rising

downside risks to growth in 2H, as the full impact of the West Asia crisis, a likely weak

monsoon, potential rate hike and a high base begin to play out. We build in 12-13% YoY

credit growth for FY27 in our base case. India Banks Macro Watch: Growth

momentum resilient amidst macro

Exhibit 1: BofA India Loan Growth Indicator uncertainty 16 June 2026