Jefferies Projects Shift in India's Domestic Credit Growth Trajectory by 2027

Jefferies' report forecasts a moderation in India’s domestic credit growth from 18% to 15% by March 2027, influenced by the higher base effect. Despite this, banks are expected to leverage overseas branches for growth, maintaining robust overall expansion. Corporate loans remain a strong growth contributor, particularly in NBFCs and engineering.

Domestic credit growth in India is anticipated to slow from its current rate of approximately 18% to around 15% by March 2027, according to a report from Jefferies. The investment bank attributes this prospective dip to the higher base effect projected from December 2026, which could temper future growth figures.

The report highlights that ongoing robust demand for credit and market share improvements from bonds and external commercial borrowings (ECBs) have supported strong growth in bank credit. However, Jefferies anticipates the pace of this growth will decelerate as the base resets at the end of 2026.

Even with this expected moderation, banks may still realize benefits from their international operations. Jefferies notes that credit growth through overseas branches could enhance overall growth by 3-4 percentage points, while deposit growth might increase further due to foreign-currency inflows, stabilizing at around 15-16% by 2027.