New Delhi, March 30,2025 : The loan growth of banking sector in the country will stay in the range of 12 to 14 per cent in the Fiscal Year 2026, according to a report by Ambit Capital.
The report expressed confidence on the easing liquidity situation as well as the easing risk weights on the unsecured retail.
The loan growth in the month of february moderated for an eighth straight month, at 12 per cent, slower than 16.6 per cent a year earlier, as per the RBI data.
As highlighted by the report, the high deposit pricing and softening yields will keep margins under pressure (5- 20bps) for most lenders in FY26.
As per the report, banks with a decent share of fixed-rate loans are better placed on margins than those with a high share of variable-rate portfolios.
After witnessing a pristine trend in asset quality after Covid, there was a spike in retail NPAs caused by a surge in unsecured retail loans (personal loans/credit cards) in recent years.
The report further added that the deposit augmentation has become challenging for all lenders irrespective of balance sheet size, geographical presence or technological advancement.
The option value for deposits has been costlier; however, bankers have been deploying money into better-yield retail assets to compensate for the same, the report added.
In recent years, Indian households witnessed multiple options to save, which resulted in a gradual decline in the share of fixed deposits. The preference of urban savers has shifted towards better-yielding investment options.
In contrast, the rise of technology has paved the way for several capital market players in rural and semi-urban geographies.
