India's Banking Sector Shows Signs of Revival as Credit Growth Rebounds

Credit growth in India improved to 11.4% in January 2025, indicating a revival in economic momentum. Increased deposit growth and robust lending in real estate and wholesale trade led the recovery. However, challenges remain in the aviation and education loan sectors, affecting personal loan growth.

After a persistent decline observed since April last year, credit growth in India is showing promising signs of recovery, climbing to 11.4% as of January this year from 11.2% recorded in December, as per Anand Rathi Research. This uptick suggests an encouraging revival in lending activities, signifying an overall boost in the country's economic momentum.

The report indicates similar trends in deposit growth, which rose to 10.3% in January, following a drop in December, primarily due to a rebound in demand and time deposits. Banks' investment in government securities has also remained robust, reporting an 11.1% increase, in line with the Reserve Bank of India's directives for enhancing high-quality liquid assets.

While industrial credit remains stable at 11.7%, infrastructure credit saw a positive turn, recovering by 1.6% in January. Meanwhile, the services sector enjoyed notable credit growth, spurred by strong performances in wholesale trade and real estate. However, the aviation sector struggled with weak growth, and personal loan expansion slowed due to reduced demand for credit card and education loans.

(With inputs from agencies.)