Credit growth to moderate in H2, FY27: Icra

By ET BureauLast Updated: Oct 28, 2026, 06:04:00 AM IST

Synopsis

Credit growth is projected to ease to 15-16% for FY27, impacted by hardening policy rates. Fresh slippages for public sector banks are estimated to increase to ₹1 lakh crore in FY27. Private banks may experience fresh slippages amounting to ₹1.3 lakh crore. While banks' asset quality may deteriorate slightly, net interest margins should improve. The overall banking sector faces challenges amid these credit growth expectations and market conditions.

Mumbai: Rating agency Icra expects credit growth to moderate in the second half of FY27 and remain subdued into the next fiscal year as hardening policy rates weigh on consumption demand.

A higher base is also likely to show optically lower growth, Icra said.

The rating agency also expects banks' asset quality to deteriorate marginally as credit expands, while net interest margins (NIM) are likely to improve as the Reserve Bank of India's rate-hiking cycle progresses.

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Icra has projected credit growth to ease to 15-16% for the full year FY27, from the current 18-19%. The agency did not provide a specific estimate for credit growth in FY28.

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Fresh slippages for public sector banks are estimated at about ₹1 lakh crore in FY27, from ₹0.9 lakh crore in FY26. For private players, fresh slippages can be at ₹1.3 lakh crore.

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