Core Insights - Credit growth in India accelerated sharply to 14.6% year-on-year (Y-o-Y) by January 31, 2026, following a subdued start to the year [1] - Deposit growth also remained strong at 12.5% Y-o-Y during the same period [1] Banking Sector Overview - Bank credit in the economy reached ₹204.75 trillion, while deposits totaled ₹248.81 trillion, with credit expanding by ₹3.41 trillion (1.7%) and deposits by ₹3.82 trillion (1.6%) [2] - In the first fortnight of January 2026, bank credit growth slowed to 13.1% Y-o-Y, and deposit growth slowed to 10.6% Y-o-Y, with credit contracting by ₹1.88 trillion and deposits by ₹3.57 trillion [3] Recent Trends and Drivers - In the last fortnight of December 2025, banking credit grew by 14.5% Y-o-Y and deposits by 12.7% Y-o-Y, supported by GST rationalization, RBI rate cuts, and increased wholesale credit demand [4] - Credit growth is anticipated to gain further momentum towards the end of FY26 [5] Company-Specific Insights - State Bank of India (SBI) has revised its FY26 credit growth guidance upwards to 13-15% from 12-14%, with expectations of sustained double-digit growth in corporate credit [6] - The retail, agriculture, and MSME (RAM) segments are expected to be the primary drivers of growth, particularly MSME lending, which will benefit from improved trade sentiment and better data availability [6] Economic Impact - SBI's Chairman, CS Setty, highlighted that recent trade deals with the EU, Oman, New Zealand, and the US are positive for the economy, providing opportunities for Indian companies and MSMEs [7]

The report stated, “Based on the estimated model, we obtain a nowcast of real GDP growth of ~7.5% in Q2FY26 with possibility of an upside surprise.” It added that GST rationalisation helped trigger a strong festive mood, which “decisively showcased triumph of hope over hype.”According to the report, indicators across agriculture, industry and services have shown clear acceleration. The share of leading indicators that reflect growth in consumption and demand rose to 83% in the second quarter, up from 70% i ...