Bks’ credit growth to moderate in FY27

crisil report

PTI

New Delhi

Amid the West Asia conflict, domestic rating agency Crisil on Wednesday estimated that banks' credit growth would moderate marginally in FY27 and delinquencies would rise.

The banking system will report 13% credit growth in 2026-27, a marginal dip compared to the 14% projected for FY26, the agency said. It also said the gross non-performing assets in the banking system have bottomed out and may rise by up to 0.20% to 2.5% by March 2027.

The agency's chief rating officer Krishnan Sitaraman pointed out that loans to micro, small and medium enterprises, especially those having an exposure to West Asia either as a market or as a source of raw material, are the key monitorable, along with micro-loans against property and some unsecured advances.

Sitaraman acknowledged that entities in sectors such as ceramics and diamond polishing have already faced adverse impact because of the war in West Asia.

Apart from the conflict-related challenges, Bihar's microfinance bill and the impact on credit culture because of Maharashtra's loan waiver scheme are also factors to be monitored, the agency said.

When asked about a relief package in light of the West Asia conflict and what the contours of the same will be, agency officials declined to give any specific answers and said fiscal and monetary authorities will respond after adversarial events with relief packages for the industry.

The measures can come in if the war is prolonged, the agency said, admitting that predicting the exact impact or the relief measures is difficult at present.