GST bazooka: Lenders raise credit growth guidance for FY26

Banks have increased their credit growth projections for the current financial year following GST reductions implemented in late September, declining interest rates after a 100-basis-point repo rate cut, and regulatory easing measures introduced by the central bank.

State Bank of India (SBI), the nation’s largest lender, emphasized that recent banking reforms by the Reserve Bank of India (RBI) during the latest monetary policy committee meeting will strengthen credit expansion.

“Industry-wide credit growth could rise by an additional 1% for FY26. We are adjusting our growth guidance upward from 11% to 12-14%, driven by strong second-quarter performance across all business segments,” stated SBI Chairman CS Setty during an earnings briefing. RBI’s policy measures combined with GST 2.0 revisions are fueling sustained credit demand, particularly in our retail, agriculture, and MSME portfolios.

Setty noted significant increases in automobile and personal loan applications following September’s GST adjustments.

Axis Bank’s Managing Director and CEO Amitabh Chaudhry highlighted that while tariff challenges affected H1FY26 performance, reduced repo rates, favorable monsoon patterns, GST cuts, and improved liquidity conditions are expected to drive recovery in H2FY26. “These factors, coupled with the RBI’s progressive regulatory enhancements, create favorable conditions for accelerated credit expansion,” Chaudhry remarked, projecting the bank’s growth to outpace industry averages by 3%.

NBFCs

Shriram Finance Vice-Chairman Umesh Revankar reported heightened credit demand in late September, particularly for two-wheelers and cars, following GST 2.0 implementation. Though originally forecasting 15% FY26 loan growth, Revankar suggested actual growth could reach 17-18%.

Piramal Finance Managing Director and CEO Jairam Sridharan observed that GST-related price reductions in used vehicles are being offset by higher sales volumes. While maintaining our 25% AUM growth target for the fiscal year, current performance significantly exceeds our initial expectations,” Sridharan commented.

Published on November 9, 2025