Scheduled commercial banks notch up robust 18.8% credit growth in Aug

Loan debt concept increase in financial debt and loan percentage
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juvaida khatun

Non-food bank credit extended by scheduled commercial banks (SCBs) expanded at a strong 18.8 per cent year-on-year in August 2026, significantly outpacing the 10.2 per cent growth recorded in the same period last year, according to the latest Reserve Bank of India data. The acceleration was broad-based, with all four major sectors — agriculture and allied activities, industry, services, and personal loans — posting healthy gains.

The services sector led the pack with credit growth of 24.3 per cent year-on-year, while personal loans grew at the slowest pace among the four categories at 16.9 per cent.

Farm credit

Lending to agriculture and allied activities rose 17.2 per cent year-on-year in the reporting month, up sharply from 7.6 per cent a year earlier.

Industrial credit grew 18.2 per cent year-on-year (versus 7 per cent in the year-ago period). In its “Sectoral Deployment of Bank Credit – August 2026” statement, the RBI noted that while credit to ‘large’ and ‘medium’ industries accelerated, ‘micro and small’ industries maintained steady expansion.

Key industries showing robust year-on-year credit growth included ‘infrastructure’, ‘all engineering’, ‘basic metal and metal products’, ‘chemical and chemical products’, ‘food processing’, ‘textiles’, ‘construction’, and ‘petroleum, coal products and nuclear fuels’.

Services sector credit surged 24.3 per cent year-on-year (up from 10.3 per cent), driven by strong demand from non-banking financial companies (NBFCs), trade, professional services, and commercial real estate.

Personal loan growth came in at 16.9 per cent, compared with 11.9 per cent a year earlier. The central bank observed that while ‘housing’ and ‘vehicle loans’ sustained double-digit expansion, ‘credit card outstanding’ and ‘loans against gold jewellery’ lost momentum.

The RBI said the sectoral credit data for August 2026 was gathered from 41 select SCBs, which collectively account for roughly 95 per cent of total non-food credit deployed by all scheduled commercial banks.

Lending and deposit rates

The robust credit offtake in August occurred against a backdrop of a marginal decline in SCBs’ weighted average lending rate (WALR) on outstanding rupee loans, which eased to 8.96 per cent from 8.97 per cent in July 2026.

However, the WALR on fresh rupee loans inched up to 8.61 per cent in August from 8.52 per cent in July.

The one-year median marginal cost of funds based lending rate (MCLR) of SCBs fell to 8.61 per cent in September from 8.70 per cent in August.

The share of external benchmark-linked loans (EBLR) in total outstanding floating-rate rupee loans stood at 68.2 per cent at end-June 2026 (up from 67.6 per cent at end-March 2026), while MCLR-linked loans accounted for 29.6 per cent (down from 30.2 per cent at end-March 2026).

The weighted average domestic term deposit rate (WADTDR) on outstanding rupee term deposits declined to 6.56 per cent in August 2026 from 6.58 per cent in July. The rate on fresh term deposits fell more sharply to 5.67 per cent from 5.85 per cent over the same period.

The softening in term deposit rates comes as banks mobilised a massive $133 billion under the limited-window Foreign Currency Non-Resident (Bank) deposit scheme, open from June 8 through August 31. The RBI provided banks a special USD-INR foreign currency swap facility to swap the proceeds of these FCNR(B) deposits.

Meanwhile, in the fortnight ended September 15, aggregate deposits and credit of all scheduled banks contracted by ₹2,47,748 crore and ₹58,813 crore respectively, per the RBI’s “Scheduled Banks’ Statement of Position in India”.

Published on September 30, 2026