From 19.5% to 9.8%, India’s bank credit growth slows sharply in May 2025, says SBI – Banking & Finance News

The credit growth of scheduled commercial banks (SCBs) in India sharply slowed to 9.8% year-on-year in May 2025, according to a recent report by the State Bank of India (SBI). This is a significant drop from the robust 19.5% credit growth recorded in the same period last year, signalling a broad-based deceleration in lending across key sectors of the economy.

SBI noted that during the first two months of the current financial year (April–May 2025), bank credit actually declined by Rs 15,676 crore. This translates to a negative year-to-date (YTD) growth of -0.1%, a stark contrast to a Rs 1.68 lakh crore increase (1.0% YTD growth) during the same period in 2024.

Deposit growth remains positive but sluggish

While bank deposits continued to grow, the pace was also slower than in the previous year. Deposits increased by Rs 3.06 lakh crore (1.4% YTD) in April–May 2025, compared to Rs 3.39 lakh crore (1.7% YTD) in the same months last year. This indicates that overall banking activity—both in credit and deposits—is showing signs of moderation.

Agriculture, industry, and services see slower credit uptake

The SBI report highlighted a slowdown in credit growth across all major sectors in April 2025. Credit to the agriculture and allied sectors grew by 9.2%, down from 19.8% a year earlier. Industrial sector credit rose by 6.6%, slightly lower than the 7.4% growth seen in the previous year.

However, within the industrial segment, certain areas like basic metals, engineering, transport equipment, textiles, and construction recorded marginal gains in credit flow. Conversely, credit to the infrastructure sector continued to lose momentum.

The services sector experienced the sharpest decline in credit growth, dropping to 10.5% in April 2025 from 22.0% a year earlier. A major reason was a significant slowdown in lending to non-banking financial companies (NBFCs), although sub-sectors like trade and software services showed resilience.

Personal loans growth eases

The personal loans segment, typically a strong driver of retail credit, also showed signs of fatigue. Growth in this segment eased to 14.5% year-on-year from 17.0% last year, mainly due to weaker demand for vehicle loans, credit card debt, and other personal borrowing.

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