India’s bank lending stayed strong at 17.7% year on year in July 2025, driven by personal, rural, and small business borrowing, even as some sectors show signs of moderation and borrowing costs diverge.
India’s bank lending held at a brisk 17.7% year on year in July 2025, according to Reserve Bank of India data, signalling that credit demand remained firm even as parts of the economy showed signs of slowing. The figure was unchanged from June and points to a lending environment still being supported by households, services and farm-related borrowing.
Personal loans continued to do much of the heavy lifting, with demand for home and vehicle finance remaining resilient. The services sector also contributed, helped by borrowing from non-banking financial companies and trade, while agricultural credit kept expanding on the back of rural investment. At the same time, some reports based on RBI data suggest the picture was less even beneath the headline number, with non-food bank credit growth moderating in annual terms from a year earlier.
That softer undercurrent was especially visible in lending to large industry and to some services borrowers, even as micro, small and medium-sized enterprises added to loan demand. The Times of India reported that MSMEs accounted for ₹50,797 crore in bank loans in the first two months of the fiscal year, while personal loans added ₹81,766 crore over the same period. The Indian Express also reported that non-food credit growth slowed to 9.9% year on year in July, down from 13.6% a year earlier.
The lending backdrop has been further complicated by pricing. Despite the Reserve Bank’s 50-basis-point repo rate cut in June, The Times of India and Angel One reported that the weighted average lending rate on new loans rose to 8.8% in July from 8.62% in June, reflecting a heavier mix of higher-yielding MSME loans ahead of the festive season. Some state-owned banks, including Punjab National Bank, Indian Bank and Bank of India, also trimmed their MCLR benchmarks in July, suggesting that borrowing costs are moving in different directions depending on the product and the lender. For policymakers, the broad message is mixed: credit is still expanding at a healthy pace, but the composition of that growth remains uneven.
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