Bank credit growth hits 15.9% in FY26, but composition debate looms

However, rapid credit growth in any market warrants scrutiny. Lenders and regulators must distinguish between credit that finances productive assets—those generating sufficient cash flow to service and repay debt—and credit that simply pulls forward consumption or fuels asset-price inflation.

The banking industry's next chapter will not hinge on whether credit grows. It will depend on whether that credit builds into genuine economic cash flows or morphs into leverage that borrowers cannot service. This distinction shapes risk appetites, lending standards, and ultimately, asset quality across the system.