India’s credit growth hits 18.6%, deposit growth lags: SBI flags capital flow boost

Bank credit in India stood at Rs 219.3 lakh crore as on June 30, 2026, after rising by Rs 3.8 lakh crore during the last fortnight of the first quarter of FY27, a fortnightly growth of 1.8%. On a year-on-year basis, credit growth accelerated sharply to 18.6%, nearly double the 9.5% growth recorded in June 2025.

Deposit growth, while strong, continues to lag behind. Aggregate deposits rose to Rs 265.4 lakh crore as on June 30, 2026, with the system recording a fortnightly increase of about Rs 7 lakh crore, or 2.7%, taking year-on-year deposit growth for Q1FY27 to 13.3%, up from 10.1% a year earlier.

Soumya Kanti Ghosh, chief economist at SBI, said in a report that netting out quarter-end deposit mobilisation, the surge also points to a jump in capital flows through routes such as FCNR(B), external commercial borrowings and the Overseas Foreign Currency Borrowing channel. India has received $7 billion in FII inflows since the government announced measures to boost foreign inflows and support the rupee, while cumulative debt inflows under the Fully Accessible Route have totalled $2.7 billion since then.

According to the SBI report, an informed estimate of overall capital flows, after stripping out trend growth, suggests the number could be as high as $15 billion, with FCNR(B) flows in particular picking up pace.

The widening gap between credit and deposit growth is reshaping bank balance sheets. With credit growth continuing to outstrip deposits, banks have been going slow on investments, largely in government securities, which stood at Rs 70.9 lakh crore at the end of the first quarter — a year-on-year growth of 5.8%, down from 8.7% in the preceding year.