India’s bank credit is expected to grow by 12–13% in FY26, slightly higher than the 11–11.5% growth seen in FY25. According to Crisil Ratings, this will be driven by new regulatory changes and expected tax cuts that could boost spending. Lower interest rates will also play a role.

3 Factors Supporting the Growth of Bank Credit

CRISIL said that 3 main factors would help drive this credit growth:

• Higher consumer spending due to likely tax cuts
• Regulatory relief from the Reserve Bank of India (RBI)
• Lower interest rates, making loans cheaper

Moreover, 2 major regulatory decisions will free up more money for banks to lend. First, the Reserve Bank of India (RBI) has rolled back the earlier increase in risk weights on loans to non-banking financial companies (NBFCs), making it easier and less capital-intensive for banks to lend to them.

Second, the implementation of stricter liquidity coverage ratio (LCR) norms has been delayed by a year, which means banks can now use funds that would otherwise have been set aside as a safety buffer, thereby increasing their lending capacity.

Better Bank Credit Flow to NBFCs

The RBI had earlier raised the risk weight on loans to NBFCs, making it harder for banks to lend to them. But from April 1, 2025, this decision was reversed. This will make lending to NBFCs easier.

In the past, loans to NBFCs grew at 21% annually (FY23–FY24). However, in FY25, this growth dropped to 6% by February. Now, lending to NBFCs is expected to grow in double digits, though not back to the previous high levels.

Corporate Bank Credit to Pick Up

Loans to the corporate sector, which makes up about 41% of total bank loans, are expected to grow at 9–10% in FY26, compared to 8% in FY25. Lending to NBFCs is a key part of corporate lending (about 18%) and was a big growth driver before FY25.

Deposit Growth Still a Concern

While bank credit is set to grow faster, deposit growth needs attention. In FY25, deposits grew at 10.3%, which may not be enough to fully support rising credit demand.

Conclusion

Crisil Ratings believes India’s credit growth will improve in FY26 due to helpful regulations and better spending by consumers. But deposit growth needs to keep pace for long-term stability.

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In response to the RBI’s 50-basis point (bp) cut in the repo rate in 2025, major banks in India have announced reductions in their lending and deposit interest rates. This move is aimed at promoting economic growth and easing financial costs for consumers.  

HDFC Bank and SBI Revise Deposit Rates 

HDFC Bank, the largest private sector lender, has reduced its savings deposit rates by 25bp. Effective from April 12, 2025, savings accounts with balances under ₹50 lakh will now earn an interest rate of 2.75%, while those with balances exceeding ₹50 lakh will accrue 3.25%.  

At 2:08 PM, HDFC Bank share price was up 3.39% and was trading at ₹1,868.00.  

State Bank of India has also revised its fixed deposit interest rates for senior citizens. FDs with a tenure of 1-3 years will now offer a 20bp reduction. FDs with a 1–2-year term will now yield 7.2% (down from 7.3%), and those with a 2–3-year tenure will earn 7.4% (down from 7.5%). These new rates will take effect from April 15, 2025. 

At 2:09 PM, SBI share price was up 1.52% and was trading at ₹765.30. 

Bank of India Cuts Fixed Deposit Rates 

Bank of India has also revised its FD interest rates for deposits below ₹3 crore. For deposits maturing between 91 days and 179 days, the bank will offer 4.25%, while deposits between 180 days to 1 year will earn 5.75%. For deposits of 1 year, the interest rate will be 7.05%, and for those between 1-2 years, the rate will be 6.75%. 

For larger deposits, ranging from ₹3 crore to ₹10 crore, the bank has announced rates as high as 6.50% for deposits maturing in 211 days to less than one year. 

At 2:11 PM, Bank of India share price was up 2.63% and was trading at ₹111.  

Lending Rates Also Reduced 

In addition to the deposit rate cuts, banks have also slashed their lending rates. SBI has reduced its repo rate-linked lending rates by 25bp to 8.25%, while its external benchmark lending rates have been adjusted to 8.65%. Bank of Maharashtra has followed suit by reducing its external benchmark lending rates to 8.65% as well. 

Impact of RBI’s Repo Rate Cut 

The recent changes in the interest rates come after the RBI’s reduction in the repo rate to 6% from 6.5%. This move follows two consecutive cuts, with the central bank citing retail inflation being well within the target range of 4%.  

The objective of RBI is to boost consumer demand and spending, especially as the the bank and India’s Finance Ministry have noted that more households are turning to market-based investment instruments like mutual funds instead of traditional bank savings. 

Conclusion 

The cuts in lending and deposit rates by major banks are expected to make borrowing cheaper and savings less lucrative. While these changes aim to stimulate the economy, they may also push consumers toward more market-based investments. 

 

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. 

Maharashtra government has reduced the monthly stipend for 8 lakh women beneficiaries under its flagship Mukhya Mantri Majhi Ladki Bahin Yojana. The reduction comes after it was found that these women were also receiving financial assistance under the Namo Shetkari Mahasanman Nidhi (NSMN) scheme.

This move is aimed at streamlining welfare distribution and improving the state’s overall fiscal health.

Why Was the Stipend Under Ladki Bahin Yojana Reduced?

Under the Ladki Bahin scheme, women are entitled to a monthly payout of ₹1,500. However, this amount is capped if the beneficiary is receiving financial aid from another government scheme. In this case, the 8 lakh women already receive ₹1,000 under the NSMN, so their Ladki Bahin stipend has been reduced to ₹500.

The scheme’s rules clearly state that beneficiaries may receive aid from multiple schemes only if the combined benefit does not exceed ₹1,500 per month.

Ongoing Scrutiny and Eligibility Checks

The reduction is part of a larger effort by the state government to scrutinise the eligibility of applicants and ensure that only those meeting the required criteria receive benefits.

The government began with around 2.63 crore applicants in October. After multiple rounds of verification, the number dropped to 2.52 crore in February, and eventually 2.46 crore beneficiaries received the stipend in February and March.

Eligibility Criteria of Ladki Bahin Yojana

Beneficiaries of the Ladki Bahin scheme must:

• Be aged between 18 and 65 years

• Be domiciled in Maharashtra

• Have a family income less than ₹2.5 lakh annually

• Not own a four-wheeler

• Not have a family member in a government job

Budgetary Constraints and Future Outlook

With a projected state debt of ₹9.3 lakh crore for 2025-26, the government is under pressure to balance welfare with fiscal responsibility. As a result, the Ladki Bahin scheme’s outlay was reduced from ₹46,000 crore to ₹36,000 crore in the 2025-26 budget.

Conclusion

The Maharashtra government’s scrutiny of the Ladki Bahin scheme reflects its effort to maintain fiscal discipline while ensuring that welfare reaches the truly deserving. As budget pressures grow, tighter checks may become the norm across other welfare schemes too.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.

UPI has already transformed the way over 450 million Indians make payments. India is now aiming to bring 200–300 million more users onto its flagship Unified Payments Interface (UPI) platform. This move will significantly boost the adoption of digital payments in the country. This will also position UPI as a global standard for real-time payments. 

Breaking the ‘Cash Memory’ 

UPI is enabling smartphone users to scan QR codes and transfer amounts ranging from a few rupees to ₹500,000 seamlessly. During its next phase of expansion, UPI will also include delegated accounts for children, household staff, and others who lack traditional banking access. These innovations are part of an effort to make digital transactions the norm, even in cash-dependent segments. 

Global Push for UPI 

As per a PwC report, India now accounts for 46% of global digital transactions. It has witnessed a 90-fold increase in digital payments over the last 12 years. The Indian government is leveraging this success to promote UPI overseas. 

With support from foreign embassies and the RBI, the Indian government has signed agreements with countries like Singapore and the UAE. Future goals include enabling cross-border payments for education and services. In 2024, Indian diaspora sent nearly US$129 billion via UPI transactions to India. 

Expanding Features and Credit Services 

NPCI is enhancing UPI’s usability by adding multilingual interfaces and chat-based transactions. It is also piloting vision recognition technology for parking payments. 

UPI’s architecture is also being explored to support credit-as-a-service models. These systems would allow lenders to make smarter credit decisions based on transaction behaviour and facilitate small-ticket loans and better collections. 

Challenges in UPI Adoption 

Despite UPI’s meteoric rise, its zero-cost model poses challenges for long-term viability. 

The Merchant Discount Rate (MDR) — previously set at 30 basis points — was waived in 2020 to boost adoption. However, the government incentives offered to offset this fell sharply from ₹36 billion in 2024 to just ₹15 billion in 2025. Industry players have since lobbied for the return of nominal transaction fees, especially for large merchants. 

Conclusion

UPI stands at a crossroads. Its unprecedented success has redefined digital payments in India and is now becoming a model for the world. However, its future will hinge on balancing accessibility with financial sustainability. As India aims to onboard millions more and expand UPI globally, careful policy decisions — especially around transaction fees — will be key to keeping momentum intact.
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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.